Question 1

A homestead exemption allows a debtor to pay less for a home than was actually owed.

Accepted Answer

A homestead exemption is a legal protection that can help a homeowner keep their primary residence in certain situations, often in the event of bankruptcy or foreclosure. However, it does not allow the debtor to pay less for a home than what is owed. It simply exempts a portion of the home's equity from being used to pay off the debtor's other debts.

Question 2

Michael performs a contract with Jill to fix the brakes on her car.Jill leaves her car with Michael,but then she refuses to pay Michael after he completes the work.Michael tells Jill that he will not return her car until she pays.Michael's lien on Jill's car will end

Accepted Answer

Michael's lien on Jill's car will end when he voluntarily surrenders possession of the car, as possession is necessary to maintain a mechanic's lien.

Question 3

Portia owes Bon $500 on their contract,but refuses to pay.To collect,Bon files a me?chanic's lien,under which security for the debt is repre?sented by

Accepted Answer

A mechanic's lien typically applies to real estate and provides security for debts owed by an owner of that property. In this case, since Bon is owed $500 on a contract by Portia, they would file a mechanic's lien against Portia's real estate as collateral to collect the debt owed. Personal property or the contract itself would not be sufficient collateral for a mechanic's lien.

Question 4

Certain types of property are exempt from writs of execution or attachment.

Accepted Answer

Certain types of property, such as homesteads, personal property up to a certain value, and retirement accounts, are exempt from writs of execution or attachment.

Question 5

A surety is secondarily liable on an obliga?tion.

Accepted Answer

The answer of A surety is secondarily liable on an...

Question 6

Pruit performs a contract with Quint to reshingle the roof on Quint's house,but Quint does not pay.Pruit notifies Quint that Pruit will foreclose on the house and sell it to satisfy the debt.This is

Accepted Answer

This is a mechanic's lien, which allows a contractor or supplier to place a lien on a property if they have not been paid for their services or materials. Foreclosing on the property and selling it is a common way to satisfy the debt.

Question 7

A surety is released from his or her obligation if the debtor pays it.

Accepted Answer

If the debtor pays the debt, the surety's obligation is satisfied and they are released from their obligation.

Question 8

A guaranty contract must be in writing to be enforceable,unless the main purpose exception applies.

Accepted Answer

According to the Statute of Frauds, a guaranty contract must be in writing to be enforceable, unless it falls under the main purpose exception, which means the guarantor does not need to sign a written agreement if their main purpose for agreeing to the guarantee is to benefit themselves, rather than the borrower.

Question 9

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

Accepted Answer

A surety is only responsible for paying a debt if the debtor cannot. However, if the debtor has defenses to the debt (such as the debt being invalid or having been paid off), the surety can also use those defenses to avoid liability.

Question 10

Loni delivers her Mazda to be repaired at Nile's Body Shop.Loni agrees to pay cash.Nile performs,but Loni does not pay.Nile tells Loni that he will keep the car until she pays.This is

Accepted Answer

The answer of Loni delivers her Mazda to be repaired...

Question 11

A creditor must exhaust all legal remedies against the principal debtor before holding the surety responsible for payment.

Accepted Answer

The answer of A creditor must exhaust all legal remedies...

Question 12

Ginny brings her bicycle to Jackson for repairs.After Jackson completes the repairs,Ginny refuses to pay him.Which of the following conditions is NOT necessary for Jackson to have an artisan's lien on Ginny's bicycle?

Accepted Answer

An artisan's lien typically requires that the service provider retains possession of the item and that the services were provided on a cash basis, not credit. Therefore, agreeing to provide services on a credit basis is not necessary for the lien.

Question 13

A creditor can demand payment from the surety BEFORE the debt is due.

Accepted Answer

The answer of A creditor can demand payment from the...

Question 14

Vehi?cles are usually included in state exemption statutes.

Accepted Answer

Vehicles are often listed as exempt property in state exemption statutes, providing protection from creditors during bankruptcy or other legal proceedings.

Question 15

A surety can assert the debtor's bankruptcy as a defense.

Accepted Answer

The answer of A surety can assert the debtor's bankruptcy...

Question 16

Clothing is not included in state exemption statutes.

Accepted Answer

Clothing is actually included in state exemption statutes in some states. It is important to check the specific statutes of each state to determine what items are exempt from sales tax.

Question 17

A surety can never assert fraud as a defense.

Accepted Answer

A surety can assert fraud as a defense under certain circumstances, such as if the creditor has engaged in fraud or misrepresentation in obtaining the surety's guarantee.

Question 18

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.

Accepted Answer

This is because the guarantor's obligation to pay the debt only arises once the debtor has failed to meet their obligations.

Question 19

A guarantor is secondarily liable on an obliga?tion.

Accepted Answer

A guarantor is someone who agrees to pay back a loan or fulfill an obligation if the primary borrower or obligor is unable to do so. The guarantor is secondarily liable because they are not the primary borrower or obligor, but they are still responsible for fulfilling the obligation if the primary borrower or obligor cannot.

Question 20

A material change in a loan contract between a creditor and a debtor dis?charges a surety only to the extent that the surety suffers a loss.

Accepted Answer

This is known as the "material alteration rule" or "rule in Holme v. Brunskill." It means that if the creditor and debtor make a material change to the loan agreement without the surety's consent, the surety is released from liability only to the extent that the change causes them harm or prejudice.

Quiz 33: Creditors Rights and Remedies