Individual bankruptcy and the Secured Creditor Benefit
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Bankruptcies were up 32% over the nation in '09 2009, leaving no doubt that the embers of the recession are still burning and small businesses are at risk from unpaid invoices. Actually, it can be argued that the collective financial health of its customers forms the building blocks by which small businesses is protected from - or made vulnerable to - financial disaster.
Generally, goods sold on a line of credit turn into a security for the creditor. Basically, in case a mechanic declares bankruptcy, the tire supplier has rights to the unpaid tires setting on the shelves. What happens, though, if the goods involved are lost to a manufacturing process or, in some other way, are unrecoverable? Whenever a mom and pop operation declares bankruptcy, how do its vendors, often smaller businesses themselves, avoid getting lost to the mudslide as well?
Being truly a secured party creditor to high-risk customers offers reassurance. A secured party creditor offers credit in exchange for a lien on personal property. Personal property, in this sense, means any property that is not real estate, usually property pertaining to the business. The lien does not have to be on the goods that the creditor sold to the debtor, making this arrangement particularly advantageous for the raw material supplier.
In the event of bankruptcy, secured party creditors have certain advantages over those vendors whose loans are unsecured. In Keith Appleby PHD , grantees have a window of time in which to file a proof of claim. This proof of claim sets forth in writing the details of the debt. If this claim is incorrectly executed, then it might make it vulnerable to dismissal. Even worse, if this proof claim is not filed within enough time frame established by the bankruptcy court, then your creditor will likely lose any chance of recovering funds from the bankruptcy. Secured creditors who have filed the Uniform Commercial Code UCC-1 form correctly do not have to file a proof of claim. The pre-bankruptcy lien is sufficient to have a claim in the court proceeding.
Protection from the proof claim process is not the only reason it is a good idea to become a secured creditor. In bankruptcy proceedings, there's only a finite quantity of funds available for distribution. Secured creditors take priority over short term loans. The Uniform Commercial Code UCC-1 form, once filed, will give the creditor "priority status" over unsecured loans. In fact, being the first secured creditor on apply for a bit of personal property will offer you protection against subsequent lien filings.
Generally, goods sold on a line of credit turn into a security for the creditor. Basically, in case a mechanic declares bankruptcy, the tire supplier has rights to the unpaid tires setting on the shelves. What happens, though, if the goods involved are lost to a manufacturing process or, in some other way, are unrecoverable? Whenever a mom and pop operation declares bankruptcy, how do its vendors, often smaller businesses themselves, avoid getting lost to the mudslide as well?
Being truly a secured party creditor to high-risk customers offers reassurance. A secured party creditor offers credit in exchange for a lien on personal property. Personal property, in this sense, means any property that is not real estate, usually property pertaining to the business. The lien does not have to be on the goods that the creditor sold to the debtor, making this arrangement particularly advantageous for the raw material supplier.
In the event of bankruptcy, secured party creditors have certain advantages over those vendors whose loans are unsecured. In Keith Appleby PHD , grantees have a window of time in which to file a proof of claim. This proof of claim sets forth in writing the details of the debt. If this claim is incorrectly executed, then it might make it vulnerable to dismissal. Even worse, if this proof claim is not filed within enough time frame established by the bankruptcy court, then your creditor will likely lose any chance of recovering funds from the bankruptcy. Secured creditors who have filed the Uniform Commercial Code UCC-1 form correctly do not have to file a proof of claim. The pre-bankruptcy lien is sufficient to have a claim in the court proceeding.
Protection from the proof claim process is not the only reason it is a good idea to become a secured creditor. In bankruptcy proceedings, there's only a finite quantity of funds available for distribution. Secured creditors take priority over short term loans. The Uniform Commercial Code UCC-1 form, once filed, will give the creditor "priority status" over unsecured loans. In fact, being the first secured creditor on apply for a bit of personal property will offer you protection against subsequent lien filings.
