Asked by Michael Mocan on Jun 14, 2024
Verified
If a creditor fails to comply with Article 9 and loses his preferred claim,he becomes a(n) ________ if the debtor is declared bankrupt and may have little chance of recovering the money owed.
A) special creditor
B) preferred creditor
C) general creditor
D) universal creditor
General Creditor
An individual or entity that is owed a debt that is not secured by collateral, leaving them with no special rights to any specific property of the debtor in case of default.
Preferred Claim
A type of claim that is given priority, especially in bankruptcy proceedings, ensuring that it is paid out before other types of claims.
Article 9
A provision of the Uniform Commercial Code that governs secured transactions involving personal property, establishing a legal framework for creating and enforcing security interests.
- Grasp the legal consequences for parties involved in secured transactions when regulations are not properly followed.
Verified Answer
MM
Makungu MasononoJun 15, 2024
Final Answer :
C
Explanation :
If a debtor gets into financial difficulties and cannot meet her obligations,even a minor noncompliance with Article 9 may cause the creditor to lose his preferred claim to the personal property of the debtor.A creditor who loses his secured interest is only a general creditor if the debtor is declared bankrupt.As a general creditor in bankruptcy proceedings,he may have little chance of recovering the money owed by the debtor because of the relatively low priority of such claims.
Learning Objectives
- Grasp the legal consequences for parties involved in secured transactions when regulations are not properly followed.