Question 1

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

Accepted Answer

The equity of redemption is the right of the debtor to redeem (buy back) the property by paying the full amount owed, plus any interest and costs, up to the time of the sale. This is the only option listed that describes the ability for Frank to keep his farm by paying off his debt. The other options do not apply to this situation.

Question 2

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

Accepted Answer

A guarantor is someone who agrees to pay back the debt if the borrower defaults, but does not have any ownership interest in the asset being purchased. In this case, Edie is only a guarantor since she is not a co-owner of the truck. She is not a surety because a surety is a third party that agrees to be responsible for the debt if the borrower defaults, but is equally liable for the debt as the borrower. By requiring Finest Quality Motors to exhaust its legal remedies against Dina before looking to her, Edie is limiting her liability to the amount that Finest cannot recover from Dina, making her a guarantor only.

Question 3

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

Accepted Answer

The reason for the result in the previous question is that Rico signed a "GUARANTY," which makes him personally responsible for fulfilling the lease's obligations if Start-Up Games, Inc. cannot do so.

Question 4

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

Accepted Answer

The answer of Bill and Cody agree to guarantee Dave's...

Question 5

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

Accepted Answer

Rico signed a GUARANTY document which is an absolute guaranty of the lease's performance, therefore, if Start-Up stops paying the rent, Rico will be liable for the unpaid amount along with Start-Up.

Question 6

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

Accepted Answer

This is a request for an order of garnishment, which allows for a portion of Khali's paycheck to be paid directly to Lew to help settle the debt. This is a common legal remedy for enforcing judgments and is available in many states. It does not involve an exemption from federal limits on creditors' actions, violates state laws, or establish a right of contribution.

Question 7

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

Accepted Answer

Reimbursement is the right of a surety to recover from the principal debtor any payments made to the creditor on behalf of the debtor.

Question 8

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

Accepted Answer

Dayna would be a surety because she is agreeing to be personally liable for the payment of the loan, ensuring the obligation is fulfilled if Chocolate! Chocolate! defaults.

Question 9

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

Accepted Answer

A guarantor is someone who agrees to pay a debt or fulfill a contractual obligation if another party fails to do so. In this scenario, if Chocolate! Chocolate! defaults on the loan, Dayna would be responsible for paying it. This makes her a guarantor.

Question 10

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

Accepted Answer

Jeff's request for the sale of the mortgaged property and payment of a portion of the proceeds indicates that he is seeking a foreclosure. This is a legal process where the lender (in this case, Jeff) can take possession of the property and sell it in order to recover the outstanding debt. A deficiency judgment would be a separate order by the court requiring Ian to pay the remaining amount owed after the sale of the property, which Jeff may also request. Right of reimbursement and redemption are not applicable in this situation.

Question 11

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

Accepted Answer

Edie is discharged from the agreement because a material alteration, such as an increase in the interest rate, was made without her consent.

Question 12

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

Accepted Answer

A request for Home Bank to pay a portion of Flip's funds to George is an order of garnishment. This is a legal action that allows a creditor to collect a debt owed by a debtor by obtaining a court order directing a third party to pay money, such as a bank or employer, that is owed to the debtor directly to the creditor instead. This is a common legal remedy for collecting debts that have not been repaid.

Question 13

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

Accepted Answer

Edie is a surety because she did not stipulate that the creditor must first pursue Dina before looking to her, meaning she is directly liable for the debt if Dina defaults. A guarantor would require the creditor to first exhaust remedies against the principal debtor.

Question 14

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

Accepted Answer

A composition agreement is a contract in which a debtor agrees to pay a lesser amount to their creditors in exchange for the discharge of their liquidated debts. This is the most appropriate choice since the scenario describes a situation where Nero's creditors have entered into an agreement with him for the discharge of his debts on the payment of a lesser amount. Subrogation is a situation where a third party steps into the shoes of a creditor and assumes their rights and obligations, while a suretyship agreement involves a third party assuming responsibility for the debtor's obligations. The scenario does not describe a violation of most states' laws, so Option D is incorrect.

Question 15

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

Accepted Answer

The requirement for a written contract with respect to liability for Chocolate! Chocolate!'s loan applies only if Dayna is a guarantor, as stated in the question. This means that if Dayna is a surety, lienor, or garnishee, a written contract is not necessary for the agreement to be enforceable.

Question 16

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

Accepted Answer

The bank can obtain a deficiency judgment against Gigi if the proceeds from the sale are insufficient to cover the outstanding debt and costs of the sale. This allows the bank to collect the remaining balance from Gigi directly.

Question 17

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

Accepted Answer

Trixie's request to the court to order the seizure and sale of Suchin's property is a request for a writ of execution. A writ of execution is a court order that allows a creditor to take possession of a debtor's property and sell it to satisfy the debt owed. This is a common method used by creditors to collect on judgments.

Question 18

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

Accepted Answer

The answer of Dolf borrows money from Elin.Dolf defaults.To use...

Question 19

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

Accepted Answer

The Statute of Frauds requires that any agreement to answer for the debt or obligation of another must be in writing. In this case, Edie is being asked to co-sign a credit application, which essentially means she is guaranteeing to repay the loan should Dina fail to do so. Therefore, the guaranty must be in writing to be enforceable.

Question 20

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

Accepted Answer

Attachment allows the creditor (Countryside Credit Union) to obtain possession of Bartleby's property as security for the debt owed, and is a common form of prejudgment remedy in debt collection cases. Contribution refers to joint liability among multiple defendants, and is not applicable in this scenario. Execution is the process of enforcing a court judgment, which has not yet been obtained in this scenario. Subrogation refers to one party stepping into another's shoes to assume their rights and obligations, and is not applicable in this scenario.

Quiz 25: Other Creditors Remedies and Suretyship