Question 1

Ronaldo's debt to Sofia is past due. Ronaldo obtains a judgment against Sofia to collect the debt, but Sofia will not pay. Ronaldo requests a writ of execution. The property that is seized under the writ of execution must be

Accepted Answer

The property seized under a writ of execution must be located within the court's geographic jurisdiction to ensure the court has the authority to enforce the seizure.

Question 2

Fact Pattern 29-2B (Questions B17-B19 apply)
Robin's home is in a state that has a $30,000 homestead exemption. Robin de?faults on a $60,000 debt that she owes to Suburban Mortgage Company. Robin's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 29-2B. Robin will receive

Accepted Answer

The homestead exemption in Robin's state is $30,000, which means that Robin is entitled to keep $30,000 of the proceeds from the sale of her home. The remaining $50,000 will go towards paying off her debt to Suburban Mortgage Company. Robin will not receive any additional money from the sale.

Question 3

George borrows funds from Hometown Credit Union (HCU) to buy real property. George signs a written instrument that gives HCU an interest in the property as security for the debt's payment. This is

Accepted Answer

A written instrument that gives a lender an interest in real property as security for a debt's payment is known as a mortgage.

Question 4

Stanley's debt to Town Bank is past due. Town Bank obtains a judgment against Stanley to collect the debt, but he refuses to pay. Town Bank asks the court to order Stanley's employer to pay a portion of his paycheck to the bank. This is a request for

Accepted Answer

This is a request for an order of garnishment, which allows a creditor to collect a portion of a debtor's wages directly from their employer.

Question 5

Lyndon owes $10,000 to Metro Bank. As a prejudgment remedy to collect the debt, Metro could use a writ of

Accepted Answer

The answer of Lyndon owes $10,000 to Metro Bank. As...

Question 6

Pippin signs a lease on behalf of Quixotic Games, Inc., with Riverview Office Suites. As part of the lease, Pippin signs a document titled "GUARANTY." If Quixotic Games stops paying the rent, it is most likely that li?ability or loss for the unpaid amount will rest with

Accepted Answer

The fact that Pippin signed a "GUARANTY" document indicates that he personally guaranteed the payment of rent if Quixotic Games fails to pay. Therefore, if Quixotic Games stops paying the rent, the liability or loss for the unpaid amount will rest with Pippin and Quixotic Games.

Question 7

Beatrix defaults on a debt to Credit Loan Corporation (CLC). As a creditor, CLC can place liens on all of Beatrix's property except

Accepted Answer

According to most state laws, motor vehicles used to commute to work are exempt from creditor liens. Therefore, CLC cannot place liens on Beatrix's motor vehicles used for commuting to work.

Question 8

Erin and Dooley, a married couple, borrow $120,000 from Capital & Credit Bank to buy a home. When Erin and Dooley divorce, they are unable to make payments on the mortgage. The market value of the home has declined to less than the balance of the loan. Capital & Credit agrees to a sale of the property for this amount. This is

Accepted Answer

This situation is a short sale, which is when the lender agrees to accept less than the full amount owed on a mortgage in order to avoid foreclosure on the property. The fact that the market value of the home has declined means that the sale price is less than the outstanding balance of the loan. A prepayment penalty is a fee charged for paying off a loan early, forbearance is when a lender agrees to temporarily suspend or reduce payments, and foreclosure is the legal process by which the lender takes possession of the property in order to recover the outstanding balance of the loan.

Question 9

Vito borrows $110,000 from Watershed Bank to buy a home. If he fails to make payments on the mortgage, the bank has the right to repossess and auction off the property securing the loan. This is

Accepted Answer

This scenario describes the process of foreclosure, where the lender (in this case, Watershed Bank) has the right to repossess and sell the property if the borrower (Vito) fails to make mortgage payments. A short sale involves selling the property for less than the outstanding mortgage balance, while forbearance is an agreement between the lender and borrower to temporarily suspend or lower payments. The right of redemption is a legal concept allowing a borrower to reclaim their property after foreclosure by paying off the outstanding debt.

Question 10

Builders Construction Company performs a contract with Christina to add a sun porch to her house, but she does not pay. In most states, Builders Construction could create a lien and place it on Christina's property by filing

Accepted Answer

In most states, builders or construction companies can file a written notice of lien to create a lien on the property of the customer who has not paid for the services provided. This gives the builders the right to foreclose on the lien and get paid from the sale proceeds of the property. A creditor's composition agreement and writs of attachment and execution are not relevant in this scenario.

Question 11

Fact Pattern 29-1B (Questions B4-B5 apply)
Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with Michael, but refuses to pay when the work is done.
-Refer to Fact Pattern 29-1B. If Michael imposes a lien on Jill's car, it will end

Accepted Answer

A lien typically ends when the lienholder voluntarily surrenders possession of the property.

Question 12

A court awards a judgment to Loan Collection Agency, who is the creditor, against Margret, who is the debtor. After the judgment, the creditor requests a court order to seize Margret's property to ensure that the judgment will be collectible. This is

Accepted Answer

The creditor is requesting a court order to seize Margret's property, which is done through a writ of execution. A judicial lien is a court order that places a lien on a debtor's property as security for a debt, but it does not involve seizing the property. A writ of attachment is a court order that allows a creditor to seize a debtor's property before a judgment has been entered. Option D is incorrect because it is not a violation of state laws for a creditor to request a court order to seize a debtor's property after obtaining a judgment.

Question 13

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

Accepted Answer

A mechanic's lien is a type of lien that is placed on a property to ensure payment for work done on that property. In this case, the work done is roof repair, and the property in question is Portia's real estate. Therefore, the security for the debt under the mechanic's lien is represented by Portia's real estate.

Question 14

Gena borrows $350,000 from Fish Island Bank to buy a home, which secures the mortgage. In the seventh year of the loan, Gena stops making payments. After the bank repossesses the property but before it is sold, Gena may buy it by paying

Accepted Answer

Since Gena has already defaulted on the loan and the bank has repossessed the property, she would need to pay the full amount of the debt, which includes any missed payments, interest, and costs. This would be the only way for Gena to retain ownership of the property.

Question 15

Fact Pattern 29-2B (Questions B17-B19 apply)
Robin's home is in a state that has a $30,000 homestead exemption. Robin de?faults on a $60,000 debt that she owes to Suburban Mortgage Company. Robin's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 29-2B. Suburban Mortgage may recover

Accepted Answer

Since Robin's home was sold at auction for $80,000 and the state has a $30,000 homestead exemption, the remaining $50,000 can be used to satisfy the debt owed to Suburban Mortgage Company. Therefore, Suburban Mortgage Company may recover $50,000 of the $60,000 debt owed.

Question 16

Ridgeline Bank provides Shirley with a mortgage to buy a home. The rate of interest is fixed for three years and then adjusts annually. This is

Accepted Answer

The mortgage has a fixed rate for three years and then adjusts annually, indicating that it is an adjustable-rate mortgage.

Question 17

Fact Pattern 29-1B (Questions B4-B5 apply)
Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with Michael, but refuses to pay when the work is done.
-Refer to Fact Pattern 29-1B. Michael refuses to return the car to Jill until she pays for the brake work. This is

Accepted Answer

An artisan's lien allows a service provider to retain possession of a customer's property until payment is made for services rendered.

Question 18

Dina asks Edie to co-sign a credit application so that she can borrow money and buy a piano from First Chair, a musical instruments and supplies seller. 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 19

Jordan is a surety for Kelly's loan from Lenders Credit Corporation. When the loan comes due, Kelly tries to pay Lenders Credit, but the creditor rejects the payment. Jordan is

Accepted Answer

When a creditor refuses payment from the principal debtor, the surety (Jordan) is released from the obligation because the creditor's refusal to accept payment discharges the surety's liability.

Question 20

Fact Pattern 29-2B (Questions B17-B19 apply)
Robin's home is in a state that has a $30,000 homestead exemption. Robin de?faults on a $60,000 debt that she owes to Suburban Mortgage Company. Robin's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 29-2B. If Suburban Mortgage recovers less than it is owed, it can realize the difference from

Accepted Answer

Suburban Mortgage can only recover the difference from nonexempt property that Robin owns, as the homestead exemption protects up to $30,000 of her home's value from creditors. Other exempt property, such as personal property or tools of the trade, may also be protected from creditors. Property owned by other members of Robin's family is generally not subject to seizure for her debts.

Quiz 29: Creditors Rights and Remedies