Repayment of the Loan to Mother - Essay Example

The paper discusses Michael whose asset was the leased Golf. He owes to entities in his mother and the credit cards. The point in this scenario is to choose to prioritize which debt to clear first. Michael needs to understand that it is his legal obligation to pay his mother since it was a loan that is legally binding. However, the loan seems to have been unsecured because it was leased and in line with the missing Personal Property Security Act (PPSA). There are two critical legal concepts that Michael needs to understand regarding his mother. It is not indicated if they perfected any collateral towards the loan and this means that in the event he could not raise the loan, the mother cannot claim anything. However, considering the case of Golf, if Michael failed to honor his lease obligation, VW would repossess the Golf. In an attempt to avoid bankruptcy from the debts including the loan he owes the mother, Michael has Bankruptcy and Insolvency Act at his disposal in which he can propose paying only a portion of the debts e.g. paying back 50 cents for every dollar owed.