Question 1

Dan defaults on a debt to Rachel. Rachel will not be able to recover the debt from​

Accepted Answer

A)  ​the sale of Dan's prize-winning pet dog. 
B)  ​the sale of Dan's investments in stocks. 
C)  ​Dan's wages. 
D)  ​Dan's lottery winnings. 
A)  ​the sale of Dan's prize-winning pet dog. 
B)  ​the sale of Dan's investments in stocks. 
C)  ​Dan's wages. 
D)  ​Dan's lottery winnings.

Question 2

An artisan's lien is possessory.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

To use attachment as a remedy, a creditor must have an enforceable right to payment of the debt.

Accepted Answer

A) True 
 B)False

Question 5

Lenders Loan Company and Mortgage Service Corporation-Nadya's creditors-contract with Nadya for the discharge of her liquidated debts on payment of a lesser sum. This is​

Accepted Answer

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

Question 6

A debtor's vehicle is never exempt from satisfaction of a judgment debt.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  ​a contract of suretyship. 
B)  ​an order that would violate most state laws. 
C)  ​a writ of attachment. 
D)  ​an order of receivership. 
A)  ​a contract of suretyship. 
B)  ​an order that would violate most state laws. 
C)  ​a writ of attachment. 
D)  ​an order of receivership.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A surety cannot assert the principal debtor's bankruptcy as a defense to avoid liability on the debtor's obligation.

Accepted Answer

A) True 
 B)False

Question 10

Helen's debt to Imprint Printers is past due. Imprint obtains a judgment against Helen, but she refuses to pay it. Imprint asks the court for an order that directs the sheriff to seize and sell any of Helen's nonexempt real or personal property that is within the court's geographic jurisdiction. This is a request for​

Accepted Answer

A)  ​a writ of execution. 
B)  ​a composition agreement. 
C)  ​an order that would violate most state laws. 
D)  ​an order of garnishment. 
A)  ​a writ of execution. 
B)  ​a composition agreement. 
C)  ​an order that would violate most state laws. 
D)  ​an order of garnishment.

Question 11

Fact Pattern 29-1
Petro Oil Refinery asks Quality Bank for a loan to increase its oil inventory. Quality requires Robin, Petro's president, sign a personal guaranty to pay the debt if Petro defaults. Meanwhile, to sell fifty barrels of refined oil to Slick Lubricants, Inc., Petro asks its outside accountant Tina to co-sign a credit application.
-Refer to Fact Pattern 29-1. If, after the loan agreement is signed, Slick agrees to a higher rate of interest without telling Tina, then Tina is​

Accepted Answer

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. 
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.

Question 12

Rico borrows $110,000 from Sterling 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

A)  ​attachment. 
B)  ​execution. 
C)  ​foreclosure. 
D)  ​redemption. 
A)  ​attachment. 
B)  ​execution. 
C)  ​foreclosure. 
D)  ​redemption.

Question 13

An employer can dismiss an employee because his or her wages are being garnished.

Accepted Answer

A) True 
 B)False

Question 14

Custom Cabinets & Carpentry Company has a claim against Duane's property to satisfy a debt that takes priority over other claims against the same property. This is​

Accepted Answer

A)  a lien.​ 
B)  ​a violation of most state laws. 
C)  ​a composition agreement. 
D)  ​a contract of suretyship. 
A)  a lien.​ 
B)  ​a violation of most state laws. 
C)  ​a composition agreement. 
D)  ​a contract of suretyship.

Question 15

A creditor's composition agreement is usually held to be enforceable.

Accepted Answer

A) True 
 B)False

Question 16

Maggie is a surety for Jo's debt to Bill. Bill and Jo decide to make material changes to the original contract without informing Maggie. Maggie is​

Accepted Answer

A)  ​bound by the contract including the changes. 
B)  ​discharged completely. 
C)  ​bound by the contract according to the original terms. 
D)  ​bound by the contract unless she objects within thirty days. 
A)  ​bound by the contract including the changes. 
B)  ​discharged completely. 
C)  ​bound by the contract according to the original terms. 
D)  ​bound by the contract unless she objects within thirty days.

Question 17

An attachment is a court-ordered seizure and taking into custody of property before a judgment is obtained on a past-due debt.

Accepted Answer

A) True 
 B)False

Question 18

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

A)  ​a fixed-rate mortgage. 
B)  ​an adjustable-rate mortgage. 
C)  ​a creditor's composition agreement. 
D)  ​a guaranty agreement. 
A)  ​a fixed-rate mortgage. 
B)  ​an adjustable-rate mortgage. 
C)  ​a creditor's composition agreement. 
D)  ​a guaranty agreement.

Question 19

No state allows a defaulting debtor to redeem the property before a foreclosure sale.

Accepted Answer

A) True 
 B)False

Question 20

Nell's debt to Olsen is past due. Olsen obtains an order of garnishment to require Nell's employer Pro Transmission Service, Inc., to pay part of Nell's paycheck to Olsen. The law​

Accepted Answer

A)  limits the amount that can be taken from Nell's take-home pay.​ 
B)  ​permits Olsen to dismiss Nell because her wages are garnished. 
C)  ​practically does not allow Olsen to collect the awarded amount. 
D)  ​requires Pro to retain Nell as an employee until the debt is paid. 
A)  limits the amount that can be taken from Nell's take-home pay.​ 
B)  ​permits Olsen to dismiss Nell because her wages are garnished. 
C)  ​practically does not allow Olsen to collect the awarded amount. 
D)  ​requires Pro to retain Nell as an employee until the debt is paid.

Exam 29: Creditors Rights and Remedies

Dan defaults on a debt to Rachel. Rachel will not be able to recover the debt from​

An artisan's lien is possessory.

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

To use attachment as a remedy, a creditor must have an enforceable right to payment of the debt.

Lenders Loan Company and Mortgage Service Corporation-Nadya's creditors-contract with Nadya for the discharge of her liquidated debts on payment of a lesser sum. This is​

A debtor's vehicle is never exempt from satisfaction of a judgment debt.

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

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

A surety cannot assert the principal debtor's bankruptcy as a defense to avoid liability on the debtor's obligation.

Rico borrows $110,000 from Sterling 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​

An employer can dismiss an employee because his or her wages are being garnished.

Custom Cabinets & Carpentry Company has a claim against Duane's property to satisfy a debt that takes priority over other claims against the same property. This is​

A creditor's composition agreement is usually held to be enforceable.

Maggie is a surety for Jo's debt to Bill. Bill and Jo decide to make material changes to the original contract without informing Maggie. Maggie is​

An attachment is a court-ordered seizure and taking into custody of property before a judgment is obtained on a past-due debt.

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​

No state allows a defaulting debtor to redeem the property before a foreclosure sale.

Nell's debt to Olsen is past due. Olsen obtains an order of garnishment to require Nell's employer Pro Transmission Service, Inc., to pay part of Nell's paycheck to Olsen. The law​

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Dan defaults on a debt to Rachel. Rachel will not be able to recover the debt from

Lenders Loan Company and Mortgage Service Corporation-Nadya's creditors-contract with Nadya for the discharge of her liquidated debts on payment of a lesser sum. This is

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

Rico borrows $110,000 from Sterling 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

Custom Cabinets & Carpentry Company has a claim against Duane's property to satisfy a debt that takes priority over other claims against the same property. This is

Maggie is a surety for Jo's debt to Bill. Bill and Jo decide to make material changes to the original contract without informing Maggie. Maggie is

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

Nell's debt to Olsen is past due. Olsen obtains an order of garnishment to require Nell's employer Pro Transmission Service, Inc., to pay part of Nell's paycheck to Olsen. The law