Exam 19: Creditors Rights and Remedies

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

Fact Pattern 19-1 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 19-1.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​

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​

Frank performs a contract with Gene to add a garage to Gene's property, but Gene does not pay. Frank can file a lien on Gene's property if, from the last date labor or materials were provided, he acts​

If a homeowner defaults, or fails to make the mortgage payments, the lender loses the right to foreclose on the mortgaged property.

Countryside Bank provides Dhani with a standard mortgage with an unchanging rate of interest to buy a home. Payments on the loan remain the same for the duration of the mortgage. This is

A creditor can demand payment from the surety before the debt is due.

Olive borrows money from Capital Loan Company. For Capital to obtain a writ of execution, Olive must​

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​

Rashi is a student at State University. In need of funds to pay for tuition and books, Rashi asks Tiempo Loans, Inc., for a short-term loan. The lender agrees to make a loan if Rashi will have someone who is financially responsible guarantee the loan payments. Umberto, a well-known businessperson and a friend of Rashi's family, calls Tiempo and agrees to pay the loan if Rashi cannot. Because of Umberto's reputation, the loan is made. Rashi is making the payments, but because of illness he is unable to work for one month. He asks Tiempo to extend the loan for three months. The lender agrees, raising the interest rate for the extended period. Umberto is not notified of the extension (and thus does not consent to it). One month later, Rashi drops out of school. All attempts to collect the remainder of the loan from Rashi fail. Can Tiempo assert a claim against Umberto on the debt?

Recording a mortgage perfects the lender's security interest in the mortgaged property.

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

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

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

Foreclosure is the legal process by which a lender repossesses and auctions off property that has secured a loan.

Edie fraudulently induces Franco, a consumer, to sign a promissory note to buy a speedboat. Edie sells the note to Gus, who takes it for value, in good faith, and without knowledge of the fraud. With respect to the defense against payment on the note to Edie, Franco can​

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​

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​

Bert, Chaka, and Doug are co-sureties of Erica's debt to Finance Loan Company. Bert pays Erica's entire debt. Bert's right to seek proportionate payments from Chaka and Doug is the right of​

There is no limit to the amount that can be taken from a debtor's weekly take-home pay through garnishment.