Question 1

Daphne defaults on a debt to Country Loan Corporation. As a creditor, Country Loan can place liens on all of Daphne's property except​

Accepted Answer

A)  ​motor vehicles used to commute to work. 
B)  ​stock in various corporations. 
C)  ​items that the debtor selects. 
D)  ​vacant commercial property. 
A)  ​motor vehicles used to commute to work. 
B)  ​stock in various corporations. 
C)  ​items that the debtor selects. 
D)  ​vacant commercial property.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

A defaulting debtor cannot redeem nonexempt property before a sale under a writ of execution.

Accepted Answer

A) True 
 B)False

Question 4

Fleet Trucking, LLC, buys a white van from Go Motors, Inc. , on credit under a guaranty signed by Herbie, Fleet's president, making him personally liable if the company does not pay. Herbie is​

Accepted Answer

A)  ​a surety. 
B)  ​a lienor. 
C)  ​a guarantor. 
D)  ​a creditor. 
A)  ​a surety. 
B)  ​a lienor. 
C)  ​a guarantor. 
D)  ​a creditor.

Question 5

A creditor's surrender of collateral to a debtor without the guarantor's consent can reduce the guarantor's obligation.

Accepted Answer

A) True 
 B)False

Question 6

Edgar refuses to pay Delia $500 for the cost to repair Edgar's washing machine and dryer, which Delia still possesses. Delia has a lien on the machines, which will terminate​

Accepted Answer

A)  ​if she continues to maintain possession. 
B)  ​if she does not file a written notice of lien within thirty days. 
C)  ​if she voluntarily surrenders possession. 
D)  ​at the end of the machines' warranty period. 
A)  ​if she continues to maintain possession. 
B)  ​if she does not file a written notice of lien within thirty days. 
C)  ​if she voluntarily surrenders possession. 
D)  ​at the end of the machines' warranty period.

Question 7

Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home. The financing documents require Laurel to maintain the property, obtain homeowners' insurance, and pay all property taxes and other assessments through the lender. With respect to these terms, a court is most likely to​

Accepted Answer

A)  ​enforce them. 
B)  ​refuse to enforce them. 
C)  ​rescind them. 
D)  ​rewrite them. 
A)  ​enforce them. 
B)  ​refuse to enforce them. 
C)  ​rescind them. 
D)  ​rewrite them.

Question 8

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

A)  ​in Ronaldo's possession. 
B)  ​in Sofia's possession. 
C)  ​in the possession of Sofia's employer or other third party. 
D)  ​within the court's geographic jurisdiction. 
A)  ​in Ronaldo's possession. 
B)  ​in Sofia's possession. 
C)  ​in the possession of Sofia's employer or other third party. 
D)  ​within the court's geographic jurisdiction.

Question 9

A court's order to seize a debtor's property after a judgment is referred to as a writ of execution.

Accepted Answer

A) True 
 B)False

Question 10

EZ Credit, Inc., lends $1,000 to Joe. Kay acts as Joe's surety. If Kay pays the loan, she gets​

Accepted Answer

A)  ​any right that EZ had against Joe, but not a right to be repaid by Joe. 
B)  ​a right to be repaid by Joe, but not any right that EZ had against Joe. 
C)  ​any right that EZ had against Joe and a right to be repaid by Joe. 
D)  ​none of the choices. 
A)  ​any right that EZ had against Joe, but not a right to be repaid by Joe. 
B)  ​a right to be repaid by Joe, but not any right that EZ had against Joe. 
C)  ​any right that EZ had against Joe and a right to be repaid by Joe. 
D)  ​none of the choices.

Question 11

Loni delivers her Mazda to be repaired at Nile's Body Shop. Loni agrees to pay cash. Nile performs, but Loni does not pay. Nile tells Loni that he will keep the car until she pays. This is​

Accepted Answer

A)  ​a judicial lien. 
B)  ​a mechanic's lien. 
C)  ​an artisan's lien. 
D)  ​a violation of most states' laws. 
A)  ​a judicial lien. 
B)  ​a mechanic's lien. 
C)  ​an artisan's lien. 
D)  ​a violation of most states' laws.

Question 12

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

A) True 
 B)False

Question 13

The roof in Rosalyn's house springs a leak. She contracts with Shelter Roofing & Restoration Company to repair the roof and fix the damage to the house. Rosalyn pays 10 percent of the price in advance. Shelter Roofing does the work, but Rosalyn refuses to pay the rest of the price. What can Shelter Roofing do, and how is it done?

Accepted Answer

Shelter Roofing can place a mechanic's l

Question 14

Portia owes Bjorn $500 on their roof repair contract, but refuses to pay. To collect, Bjorn files a mechanic's lien. Under a mechanic's lien, security for the debt is represented by​

Accepted Answer

A)  ​Portia's personal property. 
B)  ​Portia's real estate. 
C)  ​the $500 owed under the contract. 
D)  ​the contract. 
A)  ​Portia's personal property. 
B)  ​Portia's real estate. 
C)  ​the $500 owed under the contract. 
D)  ​the contract.

Question 15

An artisan's lien is effective only if a creditor has possession of the property.

Accepted Answer

A) True 
 B)False

Question 16

A creditor must exhaust all legal remedies against the principal debtor before holding a surety responsible for payment.

Accepted Answer

A) True 
 B)False

Question 17

In a suretyship relationship, a third person's credit becomes the security for a debt.

Accepted Answer

A) True 
 B)False

Question 18

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 Tina signs the application only after language is included that requires Petro to exhaust its legal remedies against Slick before looking to her, then Tina is​

Accepted Answer

A)  ​a surety. 
B)  ​a lienor. 
C)  ​a guarantor. 
D)  ​a creditor. 
A)  ​a surety. 
B)  ​a lienor. 
C)  ​a guarantor. 
D)  ​a creditor.

Question 19

An artisan's lien is a security device created at statutory law through which a creditor can recover payment for labor and materials used to increase the value of real property.

Accepted Answer

A) True 
 B)False

Question 20

Fact Pattern 29-2
Robin's home is in a state that has a $30,000 homestead exemption. Robin defaults on a $60,000 debt that she owes to Suburban Mortgage Company. Robin's home is sold at auction for $80,000.
-Refer to Fact Pattern 29-2. If Suburban Mortgage recovers less than it is owed, it can realize the difference from​

Accepted Answer

A)  ​any property that Robin owns. 
B)  ​only exempt property that Robin owns. 
C)  ​only nonexempt property that Robin owns. 
D)  ​property that any other member of Robin's family owns. 
A)  ​any property that Robin owns. 
B)  ​only exempt property that Robin owns. 
C)  ​only nonexempt property that Robin owns. 
D)  ​property that any other member of Robin's family owns.

Exam 29: Creditors Rights and Remedies

Daphne defaults on a debt to Country Loan Corporation. As a creditor, Country Loan can place liens on all of Daphne's property except​

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

A defaulting debtor cannot redeem nonexempt property before a sale under a writ of execution.

Fleet Trucking, LLC, buys a white van from Go Motors, Inc. , on credit under a guaranty signed by Herbie, Fleet's president, making him personally liable if the company does not pay. Herbie is​

A creditor's surrender of collateral to a debtor without the guarantor's consent can reduce the guarantor's obligation.

Edgar refuses to pay Delia $500 for the cost to repair Edgar's washing machine and dryer, which Delia still possesses. Delia has a lien on the machines, which will terminate​

Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home. The financing documents require Laurel to maintain the property, obtain homeowners' insurance, and pay all property taxes and other assessments through the lender. With respect to these terms, a court is most likely to​

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​

A court's order to seize a debtor's property after a judgment is referred to as a writ of execution.

EZ Credit, Inc., lends $1,000 to Joe. Kay acts as Joe's surety. If Kay pays the loan, she gets​

Loni delivers her Mazda to be repaired at Nile's Body Shop. Loni agrees to pay cash. Nile performs, but Loni does not pay. Nile tells Loni that he will keep the car until she pays. This is​

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.

Portia owes Bjorn $500 on their roof repair contract, but refuses to pay. To collect, Bjorn files a mechanic's lien. Under a mechanic's lien, security for the debt is represented by​

An artisan's lien is effective only if a creditor has possession of the property.

A creditor must exhaust all legal remedies against the principal debtor before holding a surety responsible for payment.

In a suretyship relationship, a third person's credit becomes the security for a debt.

An artisan's lien is a security device created at statutory law through which a creditor can recover payment for labor and materials used to increase the value of real property.

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The Writing Requirement in Our Digital World

Third Party Rights

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Title, Risk, and Insurable Interest

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Filters

Daphne defaults on a debt to Country Loan Corporation. As a creditor, Country Loan can place liens on all of Daphne's property except

Fleet Trucking, LLC, buys a white van from Go Motors, Inc. , on credit under a guaranty signed by Herbie, Fleet's president, making him personally liable if the company does not pay. Herbie is

Edgar refuses to pay Delia $500 for the cost to repair Edgar's washing machine and dryer, which Delia still possesses. Delia has a lien on the machines, which will terminate

Laurel borrows $150,000 from Marketplace Mortgage Loans to buy a home. The financing documents require Laurel to maintain the property, obtain homeowners' insurance, and pay all property taxes and other assessments through the lender. With respect to these terms, a court is most likely to

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

EZ Credit, Inc., lends $1,000 to Joe. Kay acts as Joe's surety. If Kay pays the loan, she gets

Loni delivers her Mazda to be repaired at Nile's Body Shop. Loni agrees to pay cash. Nile performs, but Loni does not pay. Nile tells Loni that he will keep the car until she pays. This is

Portia owes Bjorn $500 on their roof repair contract, but refuses to pay. To collect, Bjorn files a mechanic's lien. Under a mechanic's lien, security for the debt is represented by