Chapter 21 Security Interests and Creditors Rights & Chapter 22 Bankruptcy
Like any other field, business requires regulations to guide the conduct of participants. Anarchy creates room for treachery and unprecedented losses. Through the enactment of various laws, both seller and customer have a guarantee of fairness in the transactions. The activities in the previous week’s lesson brought out essential parts of commercial law. The explanations of security, interest, creditors’ rights, and bankruptcy introduced valuable experience for current and future business.
The first lesson described the importance of having security in a debit transaction. A secured interest works in favor of the creditor when it comes to debt collection (Picker, 2018, p. 3). Whenever a debtor fails to repay the loan, the creditor can use the security in place of the loan. Moreover, a debtor who gave away security will have a sense of responsibility to repay the loan on time. Picker (2018, p. 3) also adds that security is an ideal way of avoiding legal systems of reclaiming a debt. Getting back a loaned amount without litigation is essential in preventing associated costs.
Besides the secured interest, the activities highlighted the importance of creditor’s right to protect against bankrupt debtors. Yulianto (2017, p. 106), creditor’s setoff rights are essential federal and state laws that help a creditor in reducing the amount a distressed client can access. This law is necessary for settling a balance between creditor and debtor without causing stress on either side. When a debtor goes bankrupt, the creditor can use this right only to pay off the difference owed and not the whole amount.
The activities also pointed out the essential principles that govern bankruptcy. According to Yulianto (2017, p. 103), there are four universal principles of bankruptcy namely, integration, business sustainability, fairness, and equilibrium. These principles are critical as they regulate the behavior of debtors and creditors to avoid abuse of authority. Sustainable bankruptcy policy ensures careful management of debt to prevent future complications. In the process, all partied in a bankruptcy dispute get fair treatment.
The lessons are essential to daily life, but the issues of security interest and bankruptcy seem to be of higher value to me. The latter has a lot of misleading information until you get the right information. From the understanding of the principles, it is possible to manage bankruptcy without panic. Therefore in the future, when such circumstances happen, I will have the right approach and sort for the right tools to handle the situation. As for security interest, it will help me understand the nature of transactions I engaged and how to prevent the collapse of financial relations.
I am yarning to open up wholesale shops to supply construction companies with paints. In such scenarios, there will be contracts, some of which will be settled later. Therefore, debt security will critically ensure the business is running all through. In addition, knowing the rights of a creditor will assist in making claims without affecting the business. Finally, in case the company ends up in bankruptcy dispute, I shall have the right approach to the challenge.
In brief, the lessons on security interest, creditor right have some practical teaching. These topics provided skills on how to manage debt without causing panic in the business. Moreover, they are in line with my career ambition, and I will be able to apply them to build a sustainable and successful business.