Question 1

Fact Pattern 28-1A (Questions A12-A15 apply)
Dollar Value Motors asks Estimable Bank for a loan to increase its vehicle inventory.Estimable requires Flair,Dollar Value's president,sign a personal guaranty to pay the debt if Dollar Value defaults.Meanwhile,to buy a pick-up truck from Dollar Value,Gina asks Harper to co-sign a credit application.
-Refer to Fact Pattern 28-1A.If,after the loan agreement is signed,Gina agrees to a higher rate of interest without telling Harper,then Harper is
A)discharged from the agreement.
B)liable at the higher rate of interest.
C)liable at the lower rate of interest.
D)liable for the principal only.

Accepted Answer

If Gina agrees to a higher rate of interest without informing Harper, Harper is discharged from the agreement because the terms of the original agreement have been materially altered without Harper's consent.

Question 2

Francie's debt to Gage is past due.Gage brings a legal action against Francie to collect the debt.To ensure that a judgment in Gage's favor will be collectible,Gage asks the court to order the seizure of Francie's property.This is a request for
A)a guaranty (or suretyship)contract.
B)an order that would violate most state laws.
C)a writ of attachment.
D)an order of receivership.

Accepted Answer

Gage is requesting a writ of attachment, which is a legal order allowing a creditor to take possession of a debtor's property in order to secure payment of a debt. This is a common method for ensuring the collectibility of a judgment. Option A is incorrect because a guaranty contract is a contract between two parties where one agrees to fulfill the obligation of another in case of default, and there is no indication that such a contract exists between Francie and Gage. Option B is incorrect because there is no indication that the order would violate state laws. Option D is incorrect because an order of receivership is a legal order that places the property of a business or individual in the hands of a court-appointed receiver, and there is no indication that this is what Gage is requesting.

Question 3

Kyla's debt to Lark is past due.Lark obtains an order of garnishment to require Kyla's employer My Pi Pizza Restaurant to pay part of Kyla's paycheck to Lark.The law
A)limits the amount that can be taken from Kyla's take-home pay.
B)permits My Pi to dismiss Kyla because her wages are garnished.
C)practically does not allow Lark to collect the awarded amount.
D)requires My Pi to retain Kyla as an employee until the debt is paid.

Accepted Answer

The law limits the amount that can be taken from an employee's take-home pay through garnishment to prevent the employee from being left with an insufficient amount of income to live on. Therefore, Lark can only receive a portion of Kyla's paycheck, and not the entire amount.

Question 4

Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets,which Ewing still possesses.Ewing's lien on the sets will terminate
A)if Ewing continues to maintain possession.
B)if Ewing does not file a written notice of lien within thirty days.
C)if Ewing voluntarily surrenders possession.
D)within thirty days.

Accepted Answer

According to the scenario, Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets, which Ewing still possesses. In such a scenario, Ewing's lien on the sets will terminate if he voluntarily surrenders possession of the theater sets.

Question 5

Fact Pattern 28-1A (Questions A12-A15 apply)
Dollar Value Motors asks Estimable Bank for a loan to increase its vehicle inventory.Estimable requires Flair,Dollar Value's president,sign a personal guaranty to pay the debt if Dollar Value defaults.Meanwhile,to buy a pick-up truck from Dollar Value,Gina asks Harper to co-sign a credit application.
-Refer to Fact Pattern 28-1A.If Flair is a guarantor,then the guaranty is re?quired to be in writing because of
A)the debtor's right of redemption.
B)the co-signer's right of contribution.
C)the creditor's transfer of possession.
D)the Statute of Frauds.

Accepted Answer

The Statute of Frauds requires certain contracts, including guaranties, to be in writing to be enforceable.

Question 6

Ping's debt to Oak Furniture Warehouse is past due.Oak obtains a judgment against Ping,but Ping refuses to pay it.Oak asks the court for an order that directs the sheriff to seize and sell any of Ping's nonexempt real or personal property that is within the court's geographic jurisdiction.This is a request for
A)a writ of execution.
B)a composition agreement.
C)an order that would violate most state laws.
D)an order of garnishment.

Accepted Answer

Oak's request for an order directing the sheriff to seize and sell Ping's nonexempt property is a request for a writ of execution. This is a common legal remedy used by creditors to enforce a judgment and collect a debt that has not been paid voluntarily by the debtor.

Question 7

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
A)a composition agreement.
B)a subrogation.
C)a suretyship agreement.
D)in violation of most states' laws.

Accepted Answer

This is a composition agreement where the creditors have contracted with Nero to discharge his liquidated debts upon payment of a lesser sum. This is a common practice in business and is a legally recognized agreement.

Question 8

Rita is a surety for Serena's loan from Title Lenders,Inc.Rita's right to "step into the shoes" of Title Lenders,after paying Serena's debt,and ex?er?cise any of the Title Lenders's rights against Serena is the right of
A)contribution.
B)redemption.
C)reimbursement.
D)subrogation.

Accepted Answer

The right that Rita has to step into the shoes of Title Lenders and exercise any of their rights against Serena is known as subrogation. This means that Rita has the right to seek reimbursement from Serena for the amount she paid on her behalf. Therefore, the best choice is D.

Question 9

Fact Pattern 28-1A (Questions A12-A15 apply)
Dollar Value Motors asks Estimable Bank for a loan to increase its vehicle inventory.Estimable requires Flair,Dollar Value's president,sign a personal guaranty to pay the debt if Dollar Value defaults.Meanwhile,to buy a pick-up truck from Dollar Value,Gina asks Harper to co-sign a credit application.
-Refer to Fact Pattern 28-1A.If Harper signs the application only after lan?guage is included that requires Dollar Value to exhaust its legal remedies against Gina before looking to her,then Harper is
A)a surety.
B)a lienor.
C)a guarantor.
D)a creditor.

Accepted Answer

By signing the credit application with the requirement that Dollar Value exhaust its legal remedies against Gina before looking to Harper, Harper is acting as a guarantor. A guarantor is someone who agrees to pay back a debt if the original borrower defaults, but only after the creditor has attempted to collect from the borrower first.

Question 10

Sydney borrows money from Rite Now Loan Company.For Rite Now to obtain a writ of execu?tion,Sydney must
A)be unable or refuse to pay the amount of a judgment.
B)be unable to redeem Sydney's exempt property.
C)notify Rite Now in writing (in a "writ")of his intent.
D)surrender possession of his property to a court.

Accepted Answer

A writ of execution is obtained when a debtor is unable or refuses to pay the amount of a judgment. This order allows the creditor to seize property or assets to satisfy the debt.

Question 11

Rosa and Sally agree to guarantee Timon's debt.Rosa's maximum liabil?ity is $30,000,and Sally's is $20,000.Timon owes $20,000 and is in default.Rosa pays the creditor the entire amount.In the ab?sence of an agree?ment to the contrary,Rosa can recover from Sally
A)$8,000.
B)$10,000.
C)$20,000.
D)0.

Accepted Answer

Rosa paid the entire amount of $20,000, and her maximum liability is $30,000. Therefore, she can recover from Sally half of the amount she paid, which is $10,000.

Question 12

Speedy Delivery Company buys a white van from Tom's Terrific Vehicles,on credit under a guaranty signed by Ulysses,Speedy's president,making him personally liable if Speedy does not pay.Ulysses is
A)a surety.
B)a lienor.
C)a guarantor.
D)a creditor.

Accepted Answer

Ulysses is a guarantor, as he has guaranteed payment of the debt if Speedy Delivery Company fails to pay.

Question 13

Residence Painting Company has a claim against Stuart's property to satisfy a debt that takes priority over other claims against the same property.This is
A)a lien.
B)a violation of most state laws.
C)a writ of attachment.
D)a garnishment.

Accepted Answer

This is a classic example of a lien, which is a legal claim or right that a creditor has to hold onto property as collateral until a debt is paid off. Liens can take priority over other claims against the same property, and can give the creditor the right to sell the property to satisfy the debt if it remains unpaid.

Question 14

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
A)a writ of execution.
B)an order of garnishment.
C)an order that would violate most state laws.
D)an artisan's lien.

Accepted Answer

George is asking the court to order Home Bank to pay a portion of Flip's funds to him, which is known as a garnishment order. This is a legal way to collect a debt that is past due. A writ of execution is an order to seize and sell someone's property to satisfy a debt, which is not applicable in this scenario. An order that would violate most state laws is not a valid choice. An artisan's lien is a type of possessory lien that allows an artisan to retain possession of a customer's property until payment is made, which is not applicable in this scenario.

Question 15

Pruit performs a contract with Quint to reshingle the roof on Quint's house,but Quint does not pay.Pruit notifies Quint that the property will be sold to satisfy the debt.This is
A)a judicial lien.
B)a mechanic's lien.
C)an artisan's lien.
D)a violation of most state laws.

Accepted Answer

This is an example of a mechanic's lien, which is a type of lien that allows contractors, like Pruit, to place a claim on real property they have improved until they are paid for their services. Pruit can assert a mechanic's lien on Quint's property due to non-payment for the roofing services he provided, and he has the right to foreclose on the lien by selling the property to satisfy the debt.

Question 16

Fact Pattern 28-1A (Questions A12-A15 apply)
Dollar Value Motors asks Estimable Bank for a loan to increase its vehicle inventory.Estimable requires Flair,Dollar Value's president,sign a personal guaranty to pay the debt if Dollar Value defaults.Meanwhile,to buy a pick-up truck from Dollar Value,Gina asks Harper to co-sign a credit application.
-Refer to Fact Pattern 28-1A.If Harper signs the application but fails to con?di?tion her signature on Dollar Value's agreement to pursue its legal remedies against Gina before looking to her,then Harper is
A)a surety.
B)a lienor.
C)a guarantor.
D)a creditor.

Accepted Answer

Harper is a surety because she is agreeing to be responsible for Gina's debt without requiring Dollar Value to first attempt to collect from Gina.

Question 17

Doral,Eduard,and Francesca are co-sureties of Glenda's debt to Hi-Credit Company.Doral pays Glenda's entire debt.Doral's right to seek proportionate pay?ments from Eduard and Francesca is the right of
A)contribution.
B)redemption.
C)reimbursement.
D)subrogation.

Accepted Answer

Doral can exercise the right of contribution, which allows a co-surety who has paid more than their share of the debt to seek reimbursement from the other co-sureties for their proportionate share. This is the most literal definition of contribution, making it the best choice in this scenario. Redemption refers to the right of a debtor to reclaim their property after a foreclosure sale. Reimbursement is similar to contribution but refers to reimbursement for expenses rather than debt. Subrogation is the right of an insurer to seek reimbursement from a third party after paying out a claim to their insured.

Question 18

Laurel defaults on a loan owed to Maverick Bank.As a creditor,Maverick may attempt to place liens on all of Laurel's property except
A)motor vehicles used to commute to work.
B)stock in various corporations.
C)items that Laurel selects.
D)vacant commercial property.

Accepted Answer

According to the exception to liens for personal property, motor vehicles used for commuting to work are exempt and cannot be liened by creditors.

Question 19

Ronda's debt to Skye is past due.Skye brings a legal action against Ronda to collect the debt.To ensure that a judgment in Skye's favor will be collectible,Skye asks the court to order the seizure of Ronda's property.Exempt from such an order in most states would be
A)all of Ronda's real property.
B)as much of Ronda's real property as Ronda opts to exempt.
C)none of Ronda's real property.
D)Ronda's family home in its entirety or up to a specified amount.

Accepted Answer

In most states, Ronda's family home (also known as the homestead) is exempt from seizure to satisfy a debt. The exemption may cover the entire value of the home or up to a certain dollar amount, depending on the state's law.

Question 20

Diego performs a contract with Elwood to add a swimming pool to Elwood's property,but Elwood does not pay.Diego can file a lien on Elwood's property if,from the last date labor or materials were provided,he acts
A)immediately.
B)within 60 to 120 days.
C)within two years.
D)within a reasonable time.

Accepted Answer

In most states, contractors have a certain amount of time to file a lien after the last date they provided labor or materials, typically ranging from 60 to 120 days. Therefore, B is the best choice as it accurately reflects the typical time frame for lien filing.

Quiz 28: Creditors Rights and Remedies

Francie's debt to Gage is past due.Gage brings a legal action against Francie to collect the debt.To ensure that a judgment in Gage's favor will be collectible,Gage asks the court to order the seizure of Francie's property.This is a request for

Kyla's debt to Lark is past due.Lark obtains an order of garnishment to require Kyla's employer My Pi Pizza Restaurant to pay part of Kyla's paycheck to Lark.The law

Delia refuses to pay Ewing $500 in cash on their contract to repair certain theater sets,which Ewing still possesses.Ewing's lien on the sets will terminate

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

Rita is a surety for Serena's loan from Title Lenders,Inc.Rita's right to "step into the shoes" of Title Lenders,after paying Serena's debt,and ex?er?cise any of the Title Lenders's rights against Serena is the right of

Sydney borrows money from Rite Now Loan Company.For Rite Now to obtain a writ of execu?tion,Sydney must

Rosa and Sally agree to guarantee Timon's debt.Rosa's maximum liabil?ity is $30,000,and Sally's is $20,000.Timon owes $20,000 and is in default.Rosa pays the creditor the entire amount.In the ab?sence of an agree?ment to the contrary,Rosa can recover from Sally

Speedy Delivery Company buys a white van from Tom's Terrific Vehicles,on credit under a guaranty signed by Ulysses,Speedy's president,making him personally liable if Speedy does not pay.Ulysses is

Residence Painting Company has a claim against Stuart's property to satisfy a debt that takes priority over other claims against the same property.This is

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

Pruit performs a contract with Quint to reshingle the roof on Quint's house,but Quint does not pay.Pruit notifies Quint that the property will be sold to satisfy the debt.This is

Doral,Eduard,and Francesca are co-sureties of Glenda's debt to Hi-Credit Company.Doral pays Glenda's entire debt.Doral's right to seek proportionate pay?ments from Eduard and Francesca is the right of

Laurel defaults on a loan owed to Maverick Bank.As a creditor,Maverick may attempt to place liens on all of Laurel's property except

Ronda's debt to Skye is past due.Skye brings a legal action against Ronda to collect the debt.To ensure that a judgment in Skye's favor will be collectible,Skye asks the court to order the seizure of Ronda's property.Exempt from such an order in most states would be

Diego performs a contract with Elwood to add a swimming pool to Elwood's property,but Elwood does not pay.Diego can file a lien on Elwood's property if,from the last date labor or materials were provided,he acts