The Arkansas Rule is a legal principle that assumes the value of collateral securing a loan is at least equal to the outstanding balance of the loan. Under this rule, the lender must demonstrate that the sale of the collateral would not cover the loan amount. This principle was established in the case of Norton v. National Bank of Commerce, 240 Ark. 143 (Ark. 1966).
The Arkansas Rule is primarily used in the context of secured loans, where collateral is involved. It is relevant in civil law, particularly in cases related to bankruptcy, foreclosure, and loan disputes. Understanding this rule can be essential for both creditors and debtors in managing their rights and obligations. Users can utilize US Legal Forms templates to create necessary legal documents related to secured loans and collateral management.
Here are a couple of examples of abatement:
Here are a couple of examples illustrating the Arkansas Rule:
Examples of state differences (not exhaustive):
| State | Variation |
|---|---|
| Arkansas | Follows the Arkansas Rule as established in Norton v. National Bank of Commerce. |
| California | Similar principles apply, but the burden of proof may differ in certain circumstances. |
| Texas | Utilizes a different standard regarding collateral valuation in secured transactions. |
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
| Term | Definition | Difference |
|---|---|---|
| Secured Loan | A loan backed by collateral. | The Arkansas Rule specifically addresses the valuation of that collateral. |
| Unsecured Loan | A loan not backed by collateral. | The Arkansas Rule does not apply as there is no collateral involved. |
If you are involved in a secured loan situation, consider the following steps:
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| Attribute | Details |
|---|---|
| Jurisdiction | Arkansas |
| Legal Area | Civil Law |
| Burden of Proof | On the creditor |