Deck 25: Other Creditors Remedies and Suretyship

Question 1

An employer can dismiss an employee because his or her wages are being garnished.

Answer 1

False

Question 2

A contractor who makes improvements to real property,but who is not paid for the work,may place a mechanic's lien on the property.

Answer 2

True

Question 3

An attachment is a court-ordered seizure and taking into custody of property before the securing of a judgment for a past-due debt.

Answer 3

True

Question 4

The usual method of mortgage foreclosure is by a judicial sale of the property subject to the mortgage.

Question 5

A court-ordered seizure and taking into custody of property before the securing of a judgment for a past-due debt is an attachment.

Question 6

A contract of suretyship must be in writing to be enforceable.

Question 7

If a debtor will not pay a judgment,a creditor can only resort to "self-help" to collect.

Question 8

Almost all types of property can be garnished.

Question 9

State law governs the procedures that must be followed to create a mechanic's lien.

Question 10

If the proceeds of a foreclosure sale cover the costs of the sale and the mortgage debt,any surplus is a windfall to the creditor.

Question 11

A court may not order a bank,as a result of a garnishment proceeding,to turn over funds belonging to a debtor to pay a debt.

Question 12

A mortgagee can obtain a judgment against a mortgagor to cover the difference between the amount of a mortgage debt and the proceeds of a foreclosure sale.

Question 13

A creditor with an artisan's lien on property can foreclose on,and sell,the property to satisfy the debt.

Question 14

All of a debtor's pay can be garnished.

Question 15

To use attachment as a remedy,a creditor must have possession (be "attached" to)of a debtor's property.

Question 16

An artisan's lien is effective only if a creditor possesses the property subject to the lien.

Question 17

A creditors' composition agreement is usually held to be unenforceable.

Question 18

A mechanic's lien can be enforced to obtain payment for work that improves personal property.

Question 19

An artisan's lien requires that the lienholder must have agreed to provide certain services on a credit,not a cash,basis.

Question 20

A creditor with a mechanic's lien on property can sell the property to satisfy the debt.

Question 21

A guarantor is primarily liable on an obligation.

Question 22

The law protects debtors as well as creditors.

Question 23

Residence Painting Company has a claim against Stuart's property to satisfy a debt that takes priority over other claims against the same property.This is

A)a lien.
B)a violation of most state laws.
C)a writ of attachment.
D)a garnishment.

Question 24

A surety is released from his or her obligation if a debtor cannot pay a debt.

Question 25

A debtor's "business tools" may be exempt from satisfaction of a judgment debt.

Question 26

Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets,which Ewing still possesses.Ewing's lien on the sets will terminate

A)if Ewing continues to maintain possession.
B)if Ewing does not file a written notice of lien within thirty days.
C)if Ewing surrenders possession.
D)within thirty days.

Question 27

A creditor's extension of time to a debtor for making payment,without the consent of a surety,may discharge the surety.

Question 28

Urbana performs a contract with Virgil to add a sun porch to Virgil's house,but Virgil does not pay.In most states,Urbana can create a lien and place it on Virgil's property by filing

A)a written guaranty contract.
B)a writ of attachment.
C)a writ of execution.
D)a written notice of lien.

Question 29

If a surety pays the debt owed to a creditor,then the surety acquires any rights that the creditor had against the debtor.

Question 30

Payment of the principal obligation will not discharge the guarantor from the obligation.

Question 31

A surety can use any defenses available to a debtor to avoid liability on the obligation to the creditor.

Question 32

A debtor's car may be exempt from satisfaction of a judgment debt.

Question 33

Subrogation refers to the right of a creditor to assume the right of a surety with respect to rights against a debtor.

Question 34

Loni delivers her Mazda to be repaired at Nile's Body Shop.She agrees to pay cash.Nile repairs the car,but Loni refuses to pay the bill.Nile tells Loni that he will keep the car until she pays.This is

A)a judicial lien.
B)a mechanic's lien.
C)an artisan's lien.
D)a violation of most states' laws.

Question 35

If a debtor offers to pay a debt owed to a creditor but the creditor refuses the tender,the surety remains obligated on the debt.

Question 36

Each state permits a debtor to retain the family home,in its entirety or in part,free from the claims of certain creditors.

Question 37

Before the guarantor of a debt can be required to answer for the debt of a debtor,the debtor must have defaulted on the underlying obligation.

Question 38

Diego performs a contract with Elwood to add a swimming pool to Elwood's property,but Elwood does not pay.Diego can file a lien on Elwood's property if,from the last date labor or materials were provided,he acts

A)immediately.
B)within 60 to 120 days.
C)within two years.
D)within a reasonable time.

Question 39

A guaranty contract must be in writing to be enforceable.

Question 40

A surety is not discharged from his or her obligation if someone other than the debtor pays it.

Question 41

Frank's farm is to be sold at a foreclosure sale.For Frank to keep the farm by paying the full amount of the debt,plus any interest and costs that have accrued,is

A)the equity of redemption.
B)the exercise of exemption.
C)the right of contribution.
D)the right of subrogation.

Question 42

Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from Finest Quality Motors.
Refer to Fact Pattern 25-1.If Edie signs the application only after language is included that requires Finest to exhaust its legal remedies against Dina before looking to her,then Edie is

A)a guarantor and a surety.
B)a guarantor only.
C)a surety only.
D)neither a guarantor nor a surety.

Question 43

Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part of the lease, Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
Refer to Fact Pattern 25-2.The reason for the result in the previous question is that

A)Rico signed a "GUARANTY."
B)Tower Office Suites owns the property and can re-rent the premises.
C)the other tenants can equitably absorb a slight increase in rent.
D)Start-Up will likely move out when it stops paying the rent.

Question 44

Bill and Cody agree to guarantee Dave's debt.Bill's maximum liability is $60,000,and Cody's is $40,000.Dave owes $40,000 and is in default.Bill pays the creditor the entire amount.In the absence of an agreement to the contrary,Bill can recover from Cody

A)$0.
B)$16,000.
C)$20,000.
D)$40,000.

Question 45

Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part of the lease, Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
Refer to Fact Pattern 25-2.If Start-Up stops paying the rent,it is most likely that liability or loss for the unpaid amount will rest with

A)no one.
B)Rico and Start-Up.
C)Tower Office Suites.
D)the other tenants on the same property.

Question 46

Khali's debt to Lew is past due.Lew obtains a judgment against Khali to collect the debt,but Khali refuses to pay.Lew asks the court to order Khali's employer to pay a portion of Khali's paycheck to Lew.This is a request for

A)an exemption from most federal limits on creditors' actions.
B)an order of garnishment.
C)an order that would violate most state laws.
D)a right of contribution.

Question 47

Jaycee is a surety for Katelyn's loan from Lucre Bank.Jaycee's right to be repaid by Katelyn after having paid her debt is the right of

A)contribution.
B)redemption.
C)reimbursement.
D)subrogation.

Question 48

Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part of the lease, Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
Refer to Fact Pattern 25-3.If Evermore insists that Dayna sign the loan application,making her personally liable for payment whether or not Chocolate! Chocolate! defaults,Dayna will be

A)a surety.
B)a lienor.
C)a garnishee.
D)a guarantor.

Question 49

Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part of the lease, Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
Refer to Fact Pattern 25-3.If Evermore insists that Dayna sign the loan application,making her personally liable for payment only if Chocolate! Chocolate! defaults,Dayna will be

A)a surety.
B)a lienor.
C)a garnishee.
D)a guarantor.

Question 50

Ian's mortgage debt to Jeff is past due.Jeff brings a legal action against Ian to collect the debt.Jeff asks the court to order the sale of the mortgaged property and the payment of a portion of the proceeds to Jeff.This is a request for

A)a deficiency judgment.
B)a foreclosure.
C)a right of reimbursement.
D)redemption.

Question 51

Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from Finest Quality Motors.
Refer to Fact Pattern 25-1.If,after the loan agreement is signed,Dina agrees to a higher rate of interest without telling Edie,then Edie is

A)discharged from the agreement.
B)liable at the higher rate of interest.
C)liable at the lower rate of interest.
D)liable for the principal only.

Question 52

Flip's debt to George is past due.George brings a legal action against Flip to collect the debt.George asks the court to order Home Bank,in which Flip has an account,to pay a portion of the funds to George.This is a request for

A)an exemption from most states' limits on creditors' actions.
B)an order of garnishment.
C)an order that would violate most state laws.
D)a right of subrogation.

Question 53

Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from Finest Quality Motors.
Refer to Fact Pattern 25-1.If Edie signs the application but fails to stipulate that Finest must pursue its legal remedies against Dina before looking to her,then Edie is

A)a guarantor and a surety.
B)a guarantor only.
C)a surety only.
D)neither a guarantor nor a surety.

Question 54

Liu and Midge-Nero's creditors-contract with Nero for the discharge of Nero's liquidated debts on payment of a lesser sum.This is

A)a composition agreement.
B)a subrogation.
C)a suretyship agreement.
D)in violation of most states' laws.

Question 55

Rico signs a lease on behalf of Start-Up Games, Inc., with Tower Office Suites. As part of the lease, Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
Refer to Fact Pattern 25-3.Generally,for a contract between Evermore and Dayna with respect to liability for Chocolate! Chocolate!'s loan to be enforceable,it must be in writing if Dayna is

A)a surety.
B)a lienor.
C)a garnishee.
D)a guarantor.

Question 56

First State Bank holds a mortgage on Gigi's property.Gigi defaults on the debt.The bank forecloses.If the proceeds of the foreclosure sale are insufficient to pay the costs of the sale and the debt,the bank can

A)obtain a deficiency judgment against Gigi.
B)prorate the costs to its other debtors.
C)reclaim the property as a voidable transfer.
D)use the equity of redemption to redeem the property.

Question 57

Suchin's debt to Trixie is past due.Trixie obtains a judgment against Suchin to collect the debt,but Suchin refuses to pay.Trixie asks the court to order the seizure and sale of Suchin's property.This is a request for

A)a guaranty (or suretyship)contract.
B)an order that would violate most states' laws.
C)an order of receivership.
D)a writ of execution.

Question 58

Dolf borrows money from Elin.Dolf defaults.To use attachment as a remedy,Elin must first

A)file a suit against Dolf.
B)lose a suit against Dolf.
C)succeed in a suit against Dolf.
D)take possession of Dolf's property.

Question 59

Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from Finest Quality Motors.
Refer to Fact Pattern 25-1.If Edie is a guarantor,then the guaranty is required to be in writing because of

A)the debtor's right of redemption.
B)the co-signer's right of contribution.
C)the creditor's transfer of possession.
D)the Statute of Frauds.

Question 60

Bartleby owes $5,000 to Countryside Credit Union.As a prejudgment remedy to collect the debt,Countryside could use

A)attachment.
B)contribution.
C)execution.
D)subrogation.

Question 61

A pipe in Gert's house springs a leak.Gert contracts with Holly's Plumbing & Construction Company to repair the pipe and fix the damage to Gert's house.Gert pays 10 percent of the price in advance.Holly's does the work,but Gert refuses to pay the rest of the price.What can Holly's do,and how is it done

Question 62

Bret defaults on a loan owed to City Bank.As a creditor,City Bank may attempt to place liens on all of Bret's property except

A)motor vehicles that Bret uses to commute to work.
B)personal property that consists of stock in various corporations.
C)property that Bret elects to exempt.
D)real property on which Bret plans to open a retail store.

Question 63

Brick's debt to Conry is past due.Conry brings a legal action against Brick to collect the debt.To ensure that a judgment in Conry's favor will be collectible,Conry asks the court to order the seizure of Brick's property.Exempt from such an order in most states is

A)all of Brick's personal property.
B)as much of Brick's personal property as Brick opts to exempt.
C)equipment that Brick uses in a business up to a specified amount.
D)none of Brick's personal property.

Question 64

Rhonda's debt to Skyler is past due.Skyler brings a legal action against A to collect the debt.To ensure that a judgment in Skyler's favor will be collectible,Skyler asks the court to order the seizure of Rhonda's property.Exempt from such an order in most states would be

A)all of Rhonda's real property.
B)as much of Rhonda's real property as Rhonda opts to exempt.
C)none of Rhonda's real property.
D)Rhonda's family home in its entirety or up to a specified amount.

Question 65

Rita is a surety for Sue's loan from Total Finance Company.Rita's right to "step into the shoes" of Total Finance,after paying Sue's debt,and exercise any of the Total Finance's rights against Sue is the right of

A)contribution.
B)redemption.
C)reimbursement.
D)subrogation.

Question 66

Brie is a student at Collegiate University.In need of funds to pay for tuition and books,Brie asks Dependable Bank for a short-term loan.The bank agrees to make a loan if Brie will have someone who is financially responsible guarantee the loan payments.Esperanza,a well-known businessperson and a friend of Brie's family,calls the bank and agrees to pay the loan if Brie cannot.Because of Esperanza's reputation,the loan is made.Brie is making the payments,but because of illness she is unable to work for one month.She asks Dependable extend the loan for three months.The bank agrees,raising the interest rate for the extended period.Esperanza is not notified of the extension (and thus does not consent to it).One month later,Brie drops out of school.All attempts to collect the remainder of the loan from Brie fail.Can Dependable assert a claim against Esperanza on the debt

Question 67

Ross and Sally agree to guarantee Tim's debt.Ross's maximum liability is $30,000,and Sally's is $20,000.Tim owes $20,000 and is in default.Ross pays the creditor the entire amount.In the absence of an agreement to the contrary,Ross can recover from Sally

A)$8,000.
B)$10,000.
C)$20,000.
D)nothing.