Sometimes,a creditor refuses to extend credit to a debtor unless a third party agrees to become liable on the debt.The third person's credit becomes the security for the credit extended to the debtor.This relationship may be either a surety arrangement or a guaranty arrangement.

Question

Quizplus · Accepted Answer

This statement is true. A creditor may require a third party to become liable on the debt of a debtor, either through a surety arrangement or a guaranty arrangement. This provides the creditor with additional security in case the debtor defaults on the credit extended.

Sometimes,a Creditor Refuses to Extend Credit to a Debtor Unless