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  False

Question 2

All of a debtor's pay can be garnished.

Accepted Answer

A) True 
 B)False  False

Question 3

Smartt Software Company borrows $10,000 from Term 'N All Loans, Inc., but cannot repay the loan when it comes due. Term 'N All refuses to extend the time for repayment unless Smartt can provide an acceptable surety. Uno Venture Corporation agrees to act as a surety for the loan after Smartt offers the firm a discount on software and shows Uno financial statements, compiled with Term 'N All's assistance, that misrepresent Smartt's financial situation. Later, after Uno uses the discount to buy software, Smartt again defaults on repayment of the loan, and Term 'N All files a suit against Uno to collect the amount of the debt. Is Uno liable Why or why not

Accepted Answer

Uno is not liable, because Smartt committed fraud in obtaining Commercial Investments' agreement to serve as surety and Term 'N All knew about, and assisted in, the fraud. A surety is released from an obligation to pay a debt that he or she agreed to pay if the creditor fraudulently induced the surety to guarantee the debt. The surety can assert the fraud as a defense. In this problem, the debtor defrauded the surety, but the debtor did it with the help of the creditor. Thus, the creditor could not claim to be innocent of the fraud. Even if the creditor had only known about the fraud, and had not ac tively partici pated by supplying the financial statements that misrepre sented the debtor's financial condition, the surety could still avoid liabil ity because nondisclosure of a material fact is a form of fraud.

Question 4

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

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 5

An artisan's lien is possessory.

Accepted Answer

A) True 
 B)False

Question 6

If a creditor surrenders collateral to the debtor without the consent of the guarantor, this can reduce the obligation of the guarantor.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

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. 
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.

Question 8

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

Accepted Answer

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. 
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.

Question 9

Creditors may contract with a debtor for discharge of the debtor's liquidated debts.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A mechanic's lien can be enforced to recover payment from a debtor for labor and materials in the repair of personal property.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  a lien. 
B)  a violation of most state laws. 
C)  a writ of attachment. 
D)  a garnishment. 
A)  a lien. 
B)  a violation of most state laws. 
C)  a writ of attachment. 
D)  a garnishment.

Question 13

If a creditor obtains a judgment against a debtor and the debtor cannot or will not pay the judgment, the dispute is at an end.

Accepted Answer

A) True 
 B)False

Question 14

An attachment is a court-ordered seizure and taking into custody of property prior to the securing of a judgment for a past-due debt.

Accepted Answer

A) True 
 B)False

Question 15

If the debtor offers to pay the debt owed to a creditor but the creditor refuses the tender, the surety remains obligated on the debt.

Accepted Answer

A) True 
 B)False

Question 16

Payment of the principal obligation will not discharge the surety from the obligation.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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. 
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.

Question 18

Federal law governs garnishment actions.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  immediately. 
B)  within 60 to 120 days. 
C)  within two years. 
D)  within a reasonable time. 
A)  immediately. 
B)  within 60 to 120 days. 
C)  within two years. 
D)  within a reasonable time.

Question 20

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

Accepted Answer

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

Exam 28: Creditors Rights and Remedies

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

All of a debtor's pay can be garnished.

An artisan's lien is possessory.

If a creditor surrenders collateral to the debtor without the consent of the guarantor, this can reduce the obligation of the guarantor.

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

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

Creditors may contract with a debtor for discharge of the debtor's liquidated debts.

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

A mechanic's lien can be enforced to recover payment from a debtor for labor and materials in the repair of personal property.

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

If a creditor obtains a judgment against a debtor and the debtor cannot or will not pay the judgment, the dispute is at an end.

An attachment is a court-ordered seizure and taking into custody of property prior to the securing of a judgment for a past-due debt.

If the debtor offers to pay the debt owed to a creditor but the creditor refuses the tender, the surety remains obligated on the debt.

Payment of the principal obligation will not discharge the surety from the obligation.

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

Federal law governs garnishment actions.

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

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

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Statute of Frauds

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

The Function Creation of Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks and Banking in the Digital Age

Secured Transactions

Bankruptcy Law

Mortgages Foreclosures After the Recession

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, Shareholders

Corporate Merger, Consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Insurance

Wills and Trusts

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