Question 1

Which of the following is true if a debtor engaged in fraud in order to convince a surety or guarantor to enter into a contract with a third party?

Accepted Answer

If the debtor engaged in fraud to convince the surety or guarantor to enter the contract, the surety or guarantor may assert this fraud as a defense and will likely be discharged from liability.

Question 2

Which of the following was the result in the Case Opener in which the plaintiffs claimed that a mortgage foreclosure was wrongful because the foreclosure proceedings did not reveal the true secured party who had purchased the plaintiffs' loan from the original lender?

Accepted Answer

The court of appeals found the foreclosure wrongful on the basis that Georgia law required proper identification in foreclosure documents of the secured creditor.

Question 3

Which of the following is an order that permits the creditor to recover property beyond foreclosed property?

Accepted Answer

If proceeds do not cover the debt, the mortgagee can seek a deficiency judgment, an order that permits the creditor to recover property beyond the foreclosed property.

Question 4

Which of the following was the result in Cooper Investments v. Conger, the case in the text in which guarantors of a note claimed that they were not liable because the terms of the note had been altered without their consent?

Accepted Answer

In determining that the alteration released the debtors, the court concluded that "As a matter of law the change in the rate of interest materially altered the principal debtor's obligation under the note, and since the change involved an increase in the rate, it was detrimental to the Guarantors." The court also concluded that the terms of the guaranty did not grant permission for the changes.

Question 5

Which of the following was the result in Cameron v. Ewing, the case in the text involving whether monthly proceeds from a reverse mortgage were subject to garnishment?

Accepted Answer

The court ruled that the payments were subject to garnishment because they constituted debts owed to the defendant under the definition of debt. The case was remanded for a determination as to the amount of the monthly payment to which the plaintiff was entitled.

Question 6

Which of the following is a term for a lien that has priority over other types of liens?

Accepted Answer

Liens that have priority over other types of liens are called super-priority liens.

Question 7

Which of the following is a claim to property by implication of law rather than statute?

Accepted Answer

A common law lien is a claim to property by implication of the law rather than statute.

Question 8

Which of the following is a judicial order authorizing a local law officer to seize and sell any of the debtor's real or personal nonexempt property?

Accepted Answer

A writ of execution is a judicial order authorizing a local law officer to seize and sell any of the debtor's nonexempt real or personal property within the court's geographic jurisdiction.

Question 9

What is the amount of the homestead exemption?

Accepted Answer

The amount of the homestead exemption varies from state to state.

Question 10

Which of the following exemptions permits a debtor to retain all or a portion of the family home so that the family will retain some form of shelter?

Accepted Answer

The homestead exemption permits a debtor to retain all or a portion of the family home so that the family will have some form of shelter.

Question 11

Which of the following was the result in In re Hydro-Action Inc., the bankruptcy case in the text involving whether a claimant was entitled to a lien upon a conveyor belt system that it installed?

Accepted Answer

The court concluded that the claimant qualified as a mechanic and that the claimant was engaged in the manufacturing or repair of an article thereby entitling the claimant to a lien under provisions of the Texas Constitution.

Question 12

A[n] ______ is a judicial order authorizing a local law officer to seize and sell any of the debtor's nonexempt real or personal property within the court's geographic jurisdiction.

Accepted Answer

A writ of execution is a judicial order authorizing a local law officer to seize and sell any of the debtor's nonexempt real or personal property within the court's geographic jurisdiction.

Question 13

According to the text, which of the following are the classes typically exempt from seizure to satisfy a debt through a judicial lien?

Accepted Answer

When a judicial lien is involved, the following items are typically exempt from seizure:1. Household goods, appliances, and furniture (usually up to a set value).2. Clothing.3. Equity in a vehicle (usually up to a set value).4. Tools and instruments needed to carry on a trade.

Question 14

When a creditor, through legal action, seizes a debtor's property to satisfy a debt, the creditor has a[n] ______ lien.

Accepted Answer

When a creditor, through legal action, seizes a debtor's property to satisfy the debt, the creditor has a judicial lien.

Question 15

An artisan's lien is a claim on ______ property.

Accepted Answer

An artisan's lien is a claim on personal property.

Question 16

Which of the following is true regarding type of judicial liens?

Accepted Answer

There are three types of judicial liens: attachment, writ of execution, and garnishment.

Question 17

Which of the following was the result in Bend Tarp and Liner Inc., v. Bundy, the case in the text in which the plaintiff filed a lien and instituted foreclosure proceedings in connection with a dispute involving payment for a pond liner following the defendant's refusal to pay based on an alleged tear in the liner?

Accepted Answer

The appellate court affirmed the trial court's ruling that the plaintiff's installation of the liner was defective and that the plaintiff was not entitled to foreclose its lien.

Question 18

What does the Federal Consumer Credit Protection Act state regarding how much a debtor's wages may be garnished?

Accepted Answer

The Federal Consumer Credit Protection Act states that a debtor must be able to keep the greater of the following two options: 75 percent of his or her weekly net income or 30 times the federal minimum wage.

Question 19

Which of the following is a court-ordered judgment permitting a local court officer, such as a sheriff, to seize a debtor's property before the entry of a final judgment in an underlying case?

Accepted Answer

Attachment is a court order permitting a local court officer, such as a sheriff, to seize a debtor's property before the entry of a final judgment in the underlying case.

Question 20

Which of the following is a claim on property either created by a sales contract or imposed by a court in the interest of fairness?

Accepted Answer

An equitable lien is a claim on property either created by a sales contract or imposed by a court in the interest of fairness.

Quiz 31: Other Creditors Remedies and Suretyship