Question 1

The clerk of a bankruptcy court must provide consumer-debtors with information on the types of services available from credit counseling agencies.

Accepted Answer

This requirement is mandated under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Question 2

A guaranty contract must always be in writing to be enforceable.

Accepted Answer

False

Question 3

A writ of execution applies to a debtor's nonexempt real or personal property wherever located.

Accepted Answer

False

Question 4

Liens generally take priority over other claims against the same property.

Accepted Answer

Liens are legal claims against a property, and generally take priority over other claims such as mortgages or judgment liens. This means that in the event of a foreclosure or sale of the property, liens must be satisfied before other claims can be paid.

Question 5

Personal property that is most often exempt from satisfaction of judgment debts does not include equipment that the debtor uses in a business or trade.

Accepted Answer

Personal property that is often exempt from satisfaction of judgment debts does include equipment that the debtor uses in a business or trade.

Question 6

A surety is entitled to receive from the debtor the actual amount of the debt paid to the creditor on behalf of the suretyship arrangement but not other expenses incurred.

Accepted Answer

The answer of A surety is entitled to receive from...

Question 7

If a creditor wins a judgment against a debtor and the debtor will not or cannot pay the amount due,the dispute is at an end.

Accepted Answer

If a debtor cannot or will not pay a judgment, the creditor may have legal options such as wage garnishment or property seizure to try to collect the debt. The dispute is not necessarily at an end.

Question 8

If a homeowner defaults,or fails to make the mortgage payments,the lender has the right to foreclose on the mortgaged property.

Accepted Answer

This statement is true. If a homeowner defaults on their mortgage payments, the lender has the legal right to foreclose on the property and seek repayment of the outstanding loan balance.

Question 9

There is no limit to the amount that can be taken from a debtor's weekly take-home pay through garnishment.

Accepted Answer

There are limits on how much of a debtor's wages can be garnished, which varies by state and type of debt. Federal law prohibits garnishing more than 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage, whichever is less. However, some states have lower limits.

Question 10

Rulings from bankruptcy courts are final-they cannot be appealed.

Accepted Answer

Rulings from bankruptcy courts can be appealed to a higher court.

Question 11

The lender does not have to strictly comply with the state statute governing foreclosure-substantial compliance is sufficient.

Accepted Answer

The answer of The lender does not have to strictly...

Question 12

A homestead exemption allows a debtor to subtract the value of the family home from the amount of a debt.

Accepted Answer

The answer of A homestead exemption allows a debtor to...

Question 13

Only a few types of property-a debtor's wages or bank account,for example-can be garnished.

Accepted Answer

The answer of Only a few types of property-a debtor's...

Question 14

When a surety or guarantor pays a debt owed to a creditor,he or she acquires any right that the creditor had against the debtor.

Accepted Answer

This is known as the right of subrogation, which allows the surety or guarantor to step into the shoes of the creditor and pursue any legal remedies to recover the debt from the original debtor.

Question 15

A surety can be required to pay an obligation only after the principal debtor defaults and usually only after the creditor has made an attempt to collect from the debtor.

Accepted Answer

The answer of A surety can be required to pay...

Question 16

With a mechanic's lien,real estate becomes security for a debt.

Accepted Answer

A mechanic's lien is a legal claim against a property by a contractor or supplier who has provided labor, materials, or services for the improvement or repair of the property. The lien gives the lien holder the right to force the sale of the property to satisfy the debt if the property owner fails to pay. Therefore, the real estate serves as security for the debt owed to the lien holder.

Question 17

One goal of bankruptcy law is to ensure equitable treatment of creditors who are competing for a debtor's assets

Accepted Answer

This is true. Bankruptcy law aims to ensure that all creditors are treated fairly and receive a proportional share of the debtor's assets. This is done through a system of priority and distribution.

Question 18

A fixed-rate mortgage is a standard mortgage with a rate of interest that changes periodically.

Accepted Answer

A fixed-rate mortgage is a standard mortgage with a fixed rate of interest that does not change throughout the entire repayment term.

Question 19

Foreclosure is the legal process by which a lender repossesses and auctions off property that has secured a loan.

Accepted Answer

Foreclosure is indeed the legal process by which a lender can take possession of and sell property that has been used as collateral for a loan, in order to satisfy the outstanding debt if the borrower defaults on the loan.

Question 20

If a debtor does not pay a mechanic's lien,the debtor's property can be sold to sat-isfy the debt.

Accepted Answer

This is true. A mechanic's lien gives a person or company the right to hold onto a piece of property (such as a car or house) until they are paid for work that they have done on that property. If the debtor does not pay the lien, the property can be sold to satisfy the debt.

Quiz 15: Creditors Rights and Bankruptcy