Release from the primary obligation of a debt may theoretically be achieved by:
A) Settlement of the debt.
B) Forgiveness of the debt.
C) Insubstance defeasance.
D) Assumption by a third party.
E) All of the given answers.

Question

Quizplus · Accepted Answer

All of the given answers are theoretically possible ways to achieve release from the primary obligation of a debt. Settlement of the debt involves paying the debt in full or negotiating a lesser amount with the creditor. Forgiveness of the debt happens when the creditor chooses to waive the debt entirely or a court declares the debt unenforceable. Insubstance defeasance involves replacing the original debt with another financial instrument that has the same value but different terms. Assumption by a third party occurs when another person or entity takes on the responsibility of the debt.

Release from the Primary Obligation of a Debt May Theoretically