Warren- hates banks usually is pro debtor

*2005- made it harder for individual consumers to file for bankruptcy

- bankruptcy was so easy that ppl were recklessly running up debt and then using
this new (1978 tool) to discharge debt and walk away
Why was economy doing great but consumer filings skyrocketing?
- Debt was being incurred irresponsibly in good times
Code Organizations
- 1,3,5 are general chapters that apply to all proceedings
- Ch.7- liquidation bankruptcy
o Take all assets and say creditors you can have it all
Ch.9- municipal liquidation
October 21st no class
1.5 assignments per class
Problem 1.2 p.18-19
Do analysis for the bank- see list
Total monthly amounts: 10,650 food:1800add owed money: 11,800

Has just barely enough to cover the paymentshes right on the edge

Talis is paying everyone elsebut not me

o Why home mortgage is being paidto prevent foreclosure on the
house;
Borrow money from bankpromise to pay money back
contractual debt obligation to pay money back + interest in the
house as security for the payment of the money; if money isnt
repaid the bank can take house and sell it
o Car Loan- car is used as security for the loan (property interest)
mortgage on personal property security interest or chattel mortgage
o Gym membership- can revoke gym membership; can sue you
o Dentist- may need work again; can sue you
o Coworker- shame
o Country club- could be important to business; embarrassing
o Visa/mastercard- credit score will go down if she doesnt pay; can
cancel her cards
o Exs- if not paying alimony then it will be a garnishment (take out of
paycheck before you choosecreditor will go to employer and direct
the money)

Security Pacific- no security, no service going forward that you can deprive
debtor of- does have legal leverage

Distinction with other vendorstransactional leverage where you can

withhold service

Country club/coworker/dentist- reputation

- File a lienbefore you file a lien you have to have to prove to the court that
debtor owes somethingyou have to sue
o How do you increase your leverage?

Come up with a security plan with debtor and say we have a

problem and try to compromise (lower interest rates, stretch
out)
Give me a lien on house or lien on car

Problem 1.3
Bought home in 2005
- Price $205K
- Paid

Value: 205K of house

- Put down 15K
- Took down mortgage for 190K
How much equity did he have in the house on day he bought it? Value of propertydebt against property= amount of property you own/ equity
205K-190K= 15K
Paid mortgage down to 180K.now he has 25K in equity
Servicer forclosesand bids how will money be split?
180K will go to bank and 25K will go to Woo
If there is a 2nd lien for 10K what happens when there is foreclosure?

The first mortgage holder gets to eat first

2nd mortgage holder gets 2nd

*What makes someone first and someone seconddeals with when the person filed
it
- the property interest ranks first in timefirst in time is first in right