Question 1

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 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

A guarantor can be required to pay an obligation only after the principal debtor defaults.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

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 10

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 11

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 12

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 13

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.

Question 14

An artisan's lien is possessory.

Accepted Answer

A) True 
 B)False

Question 15

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 Robin is a guarantor, then the guaranty is required to be in writing because of​

Accepted Answer

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. 
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.

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

A guarantor is secondarily liable on an obligation.

Accepted Answer

A) True 
 B)False

Question 18

A lien is an encumbrance on property to satisfy a debt or protect a claim for the payment of a debt.

Accepted Answer

A) True 
 B)False

Question 19

In a few states, statutes allow the homestead exemption only if the judgment debtor has a family.

Accepted Answer

A) True 
 B)False

Question 20

A guaranty contract must normally be in writing to be enforceable.

Accepted Answer

A) True 
 B)False

Exam 19: Creditors Rights and Remedies

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

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

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 guarantor can be required to pay an obligation only after the principal debtor defaults.

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

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

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​

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​

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.

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​

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​

An artisan's lien is possessory.

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

A guarantor is secondarily liable on an obligation.

A lien is an encumbrance on property to satisfy a debt or protect a claim for the payment of a debt.

In a few states, statutes allow the homestead exemption only if the judgment debtor has a family.

A guaranty contract must normally be in writing to be enforceable.

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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

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

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

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

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