Question 1

Fact Pattern 28-4B 
Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 28-4B.Mary will receive
A)0.
B)$30,000.
C)$50,000.
D)$60,000.

Accepted Answer

Mary is entitled to the $30,000 homestead exemption, which means that the first $30,000 of the auction proceeds are protected and cannot be used to pay off her debt to Nina. The remaining $50,000 will be used to satisfy Mary's debt, leaving her with no proceeds from the sale.

Question 2

Khali's debt to Lew is past due.Lew obtains a judgment against Khali to collect the debt,but Khali refuses to pay.Lew asks the court to order Khali's employer to pay a portion of Khali's paycheck to Lew.This is a request for
A)a mechanic's lien.
B)an order of garnishment.
C)an order that would violate most state laws.
D)a writ of attachment.

Accepted Answer

This is a request for an order of garnishment, which is a legal order that requires an employer to withhold a certain percentage of an employee's earnings and pay it directly to the creditor. This is a common method for collecting a judicially issued judgment against a debtor who refuses to pay. A mechanic's lien is a type of security interest that grants a creditor priority over other creditors in the event of a debtor's bankruptcy, but it does not involve wage garnishment. A writ of attachment is a court order that allows a creditor to seize a debtor's property in order to secure a debt, but it also does not involve wage garnishment. Choice C is incorrect because garnishment is a legally recognized method of debt collection and is not in violation of most state laws.

Question 3

Dolf borrows money from Elin.Dolf defaults.To use attachment as a remedy,Elin must first
A)file a suit against Dolf.
B)lose a suit against Dolf.
C)succeed in a suit against Dolf.
D)take possession of Dolf's property.

Accepted Answer

Elin must first file a suit against Dolf to use attachment as a remedy, as attachment is a legal process that typically requires a court order initiated by a lawsuit.

Question 4

Brick's debt to Conry is past due.Conry brings a legal action against Brick to collect the debt.To ensure that a judgment in Conry's favor will be collectible,Conry asks the court to order the seizure of Brick's property.Exempt from such an order in most states is
A)all of Brick's personal property.
B)as much of Brick's personal property as Brick opts to exempt.
C)equipment that Brick uses in a business up to a specified amount.
D)none of Brick's personal property.

Accepted Answer

In most states, equipment that Brick uses in a business up to a specified amount is exempt from seizure ordered by the court. The exemption amount may vary depending on the state's laws. The other options are not correct because all of Brick's personal property can be seized, and the amount of personal property that Brick can opt to exempt also varies depending on the state's laws.

Question 5

Fact Pattern 28-1B 
Chocolate! Chocolate! Corporation is a new company that needs to borrow money to meet its payroll.Dayna,president and owner of Chocolate! Chocolate!,asks Evermore Credit Union to loan the funds to Chocolate! Chocolate!
-Refer to Fact Pattern 28-1B.If Evermore insists that Dayna sign the loan applica?tion,making her personally liable for payment whether or not Chocolate! Chocolate! defaults,Dayna will be
A)a surety.
B)a lienor.
C)a garnishee.
D)a guarantor.

Accepted Answer

Dayna would be a surety because she is agreeing to be personally liable for the loan, ensuring payment if Chocolate! Chocolate! defaults.

Question 6

Fact Pattern 28-4B 
Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 28-4B.If Nina recovers less than she is owed,she can realize the difference from
A)any property that Mary owns.
B)only exempt property that Mary owns.
C)only nonexempt property that Mary owns.
D)property that any other member of Mary's family owns.

Accepted Answer

The homestead exemption only applies to Mary's primary residence and does not protect nonexempt property. Therefore, if Nina recovers less than she is owed, she can only realize the difference from nonexempt property that Mary owns. Mary's exempt homestead is not available to pay off her debt. The debt is also not the responsibility of any other member of Mary's family.

Question 7

Fact Pattern 28-3B (Questions 
Dillon and Evan are brothers.They agree to act as guarantors on a loan made by their sister,Fiona.Fiona defaults on the payments and Dillon re?fuses to pay.Evan pays the debt.
-Refer to Fact Pattern 28-3B.Evan can recover from Dillon under
A)the right of proportionate liability.
B)the right of reimbursement.
C)the right of contribution.
D)no right,because the parties are brothers.

Accepted Answer

The right of contribution allows a co-guarantor who has paid more than his or her share of a debt to recover from the other co-guarantor(s) for their share of the obligation. The fact pattern states that Evan paid the debt, and as Dillon had agreed to act as a guarantor, Evan can seek contribution from Dillon for Dillon's share of the obligation. The fact that they are brothers does not affect this right.

Question 8

Fact Pattern 28-2B 
Rico signs a lease on behalf of Start-Up Games,Inc. ,with Tower Office Suites.As part of the lease,Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
-Refer to Fact Pattern 28-2B.If Start-Up stops paying the rent,it is most likely that li?ability or loss for the unpaid amount will rest with
A)no one.
B)Rico and Start-Up.
C)Tower Office Suites.
D)the other tenants on the same property.

Accepted Answer

Rico signed a guaranty stating that he is personally guaranteeing the performance of the lease, so if Start-Up fails to pay rent, Rico will be liable for the unpaid amount. Tower Office Suites is not responsible for collecting rent from other tenants, so the liability or loss would not rest with them. The other tenants on the same property are unrelated to this lease agreement and would not have any liability or loss.

Question 9

Suchin's debt to Trixie is past due.Trixie obtains a judgment against Suchin to collect the debt,but Suchin refuses to pay.Trixie asks the court to order the seizure and sale of Suchin's property.This is a request for
A)a guaranty (or suretyship)contract.
B)an order that would violate most states' laws.
C)an order of receivership.
D)a writ of execution.

Accepted Answer

Trixie's request is for a writ of execution, which is a court order allowing for the seizure and sale of the debtor's property to satisfy the debt owed. This is a common method for collecting a judgment in many jurisdictions.

Question 10

Urbana performs a contract with Virgil to add a sun porch to Virgil's house,but Virgil does not pay.In most states,Urbana can create a lien and place it on Virgil's property by filing
A)a written guaranty contract.
B)a writ of attachment.
C)a writ of execution.
D)a written notice of lien.

Accepted Answer

A written notice of lien is the appropriate choice as it is a legal claim against a property to secure payment for work or materials provided for that property. This lien can be filed with the local county recorder's office and prevents the property owner from selling or transferring ownership of the property until the debt is paid. Choice A is incorrect as a written guaranty contract is not relevant to this situation. Choice B and C are also incorrect as writs of attachment and execution are used in situations where a court orders property to be seized to satisfy a debt, but in this case, Urbana is creating a lien as a means of securing payment.

Question 11

Bartleby owes $5,000 to Countryside Credit Union.As a prejudg?ment remedy to collect the debt,Countryside could use
A)attachment.
B)contribution.
C)execution.
D)subrogation.

Accepted Answer

Attachment is a type of prejudgment remedy that allows a creditor to seize a debtor's property to satisfy a debt. This would be the most appropriate option for Countryside to use in order to collect the debt owed by Bartleby. Contribution, subrogation, and execution are not applicable in this scenario.

Question 12

Bill and Cody agree to guarantee Wyatt's debt.Bill's maximum liabil?ity is $60,000,and Cody's is $40,000.Wyatt owes $40,000 and is in default.Bill pays the creditor the entire amount.In the ab?sence of an agree?ment to the contrary,Bill can recover from Cody
A)0.
B)$16,000.
C)$20,000.
D)$40,000.

Accepted Answer

Bill's maximum liability is $60,000, but he only paid $40,000 to the creditor. Therefore, he can recover up to $20,000 from Cody. The answer is not A because Cody agreed to guarantee the debt, which means he has some liability. The answer is not C or D because Bill's maximum liability was $60,000, but he only paid $40,000, so he cannot recover the full amount from Cody.

Question 13

Fact Pattern 28-1B 
Chocolate! Chocolate! Corporation is a new company that needs to borrow money to meet its payroll.Dayna,president and owner of Chocolate! Chocolate!,asks Evermore Credit Union to loan the funds to Chocolate! Chocolate!
-Refer to Fact Pattern 28-1B.If Evermore insists that Dayna sign the loan applica?tion,making her personally liable for payment only if Chocolate! Chocolate! de?faults,Dayna will be
A)a surety.
B)a lienor.
C)a garnishee.
D)a guarantor.

Accepted Answer

If Dayna signs the loan application making her personally liable for payment only if Chocolate! Chocolate! defaults, she will be a guarantor. A guarantor is a person who agrees to be responsible for paying back a loan if the borrower does not. In this case, Chocolate! Chocolate! is the borrower and Dayna is agreeing to pay back the loan only if Chocolate! Chocolate! fails to do so.

Question 14

Jay is a surety for Katelyn's loan from Lucre Bank.Jay's right to be repaid by Katelyn after having paid her debt is the right of
A)contribution.
B)redemption.
C)reimbursement.
D)subrogation.

Accepted Answer

The right of reimbursement allows a surety, like Jay, to recover the amount paid on behalf of the principal debtor, Katelyn, after settling her debt with the creditor, Lucre Bank.

Question 15

Mike owes $12,000 to Nora,$6,000 to Owen,and $6,000 to Pat.The three creditors enter into an agreement with Mike to discharge the debts on payment of a sum of $12,000 to them,to be divided proportionately.This is
A)a composition agreement.
B)a guaranty agreement.
C)a judicial lien.
D)a suretyship agreement.

Accepted Answer

A composition agreement is a contract between a debtor and two or more creditors in which the creditors agree to accept a lesser amount than is owed in full satisfaction of their claims. In this case, Nora, Owen, and Pat have agreed to discharge Mike's debts for a payment of $12,000 divided proportionately. A guaranty agreement is an agreement in which one person agrees to be responsible for the debt or obligation of another person. A judicial lien is a court-ordered lien placed on a debtor's property to secure payment of a debt. A suretyship agreement is an agreement in which one person guarantees the performance or payment of another person's obligation. None of these options accurately describe the agreement between Mike, Nora, Owen, and Pat.

Question 16

Fact Pattern 28-4B 
Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000.
-Refer to Fact Pattern 28-4B.Nina may recover
A)0.
B)$30,000.
C)$50,000.
D)$60,000.

Accepted Answer

Mary's home sells for $80,000, but $30,000 of that is protected by the homestead exemption. This leaves $50,000 in proceeds from the sale. Since Mary owed Nina $60,000, Nina could recover up to the amount of the sale proceeds, which is $50,000 in this case.

Question 17

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

Accepted Answer

The answer of Loni delivers her Mazda to be repaired...

Question 18

Fact Pattern 28-1B 
Chocolate! Chocolate! Corporation is a new company that needs to borrow money to meet its payroll.Dayna,president and owner of Chocolate! Chocolate!,asks Evermore Credit Union to loan the funds to Chocolate! Chocolate!
-Refer to Fact Pattern 28-1B.Generally,for a contract between Evermore and Dayna with respect to liability for Chocolate! Chocolate!'s loan to be enforceable,it must be in writing if Dayna is
A)a surety.
B)a lienor.
C)a garnishee.
D)a guarantor.

Accepted Answer

A guarantor is a person or entity that agrees to be responsible for the debt of another. Generally, contracts involving guarantees must be in writing to be enforceable under the statute of frauds. Therefore, if Dayna is acting as a guarantor for Chocolate! Chocolate!'s loan from Evermore, the contract must be in writing to be enforceable.

Question 19

Fact Pattern 28-2B 
Rico signs a lease on behalf of Start-Up Games,Inc. ,with Tower Office Suites.As part of the lease,Rico signs a document titled "GUARANTY," which states that it is "an absolute guaranty" of the lease's performance.
-Refer to Fact Pattern 28-2B.The reason for the result in the previous question is that
A)Rico signed a "GUARANTY."
B)Tower Office Suites owns the property and can re-rent the premises.
C)the other tenants can equitably absorb a slight increase in rent.
D)Start-Up will likely move out when it stops paying the rent.

Accepted Answer

The reason for the result in the previous question is that Rico signed a document titled "GUARANTY," which contains an absolute guaranty of the lease's performance. This means that Rico is personally liable for any defaults or non-performance of the lease by Start-Up Games, Inc.

Question 20

Fact Pattern 28-3B (Questions 
Dillon and Evan are brothers.They agree to act as guarantors on a loan made by their sister,Fiona.Fiona defaults on the payments and Dillon re?fuses to pay.Evan pays the debt.
-Refer to Fact Pattern 28-3B.Evan can recover from Fiona under
A)the right of proportionate liability.
B)the right of reimbursement.
C)the right of subrogation.
D)no one,because the parties are brother and sister.

Accepted Answer

The answer of Fact Pattern 28-3B (Questions 
Dillon and Evan...

Quiz 28: A: Creditors Rights and Remedies

Fact Pattern 28-4B Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000. -Refer to Fact Pattern 28-4B.Mary will receive

Khali's debt to Lew is past due.Lew obtains a judgment against Khali to collect the debt,but Khali refuses to pay.Lew asks the court to order Khali's employer to pay a portion of Khali's paycheck to Lew.This is a request for

Dolf borrows money from Elin.Dolf defaults.To use attachment as a remedy,Elin must first

Brick's debt to Conry is past due.Conry brings a legal action against Brick to collect the debt.To ensure that a judgment in Conry's favor will be collectible,Conry asks the court to order the seizure of Brick's property.Exempt from such an order in most states is

Fact Pattern 28-4B Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000. -Refer to Fact Pattern 28-4B.If Nina recovers less than she is owed,she can realize the difference from

Fact Pattern 28-3B (Questions Dillon and Evan are brothers.They agree to act as guarantors on a loan made by their sister,Fiona.Fiona defaults on the payments and Dillon re?fuses to pay.Evan pays the debt. -Refer to Fact Pattern 28-3B.Evan can recover from Dillon under

Suchin's debt to Trixie is past due.Trixie obtains a judgment against Suchin to collect the debt,but Suchin refuses to pay.Trixie asks the court to order the seizure and sale of Suchin's property.This is a request for

Urbana performs a contract with Virgil to add a sun porch to Virgil's house,but Virgil does not pay.In most states,Urbana can create a lien and place it on Virgil's property by filing

Bartleby owes $5,000 to Countryside Credit Union.As a prejudg?ment remedy to collect the debt,Countryside could use

Bill and Cody agree to guarantee Wyatt's debt.Bill's maximum liabil?ity is $60,000,and Cody's is $40,000.Wyatt owes $40,000 and is in default.Bill pays the creditor the entire amount.In the ab?sence of an agree?ment to the contrary,Bill can recover from Cody

Jay is a surety for Katelyn's loan from Lucre Bank.Jay's right to be repaid by Katelyn after having paid her debt is the right of

Mike owes $12,000 to Nora,$6,000 to Owen,and $6,000 to Pat.The three creditors enter into an agreement with Mike to discharge the debts on payment of a sum of $12,000 to them,to be divided proportionately.This is

Fact Pattern 28-4B Mary's home is in a state that has a $30,000 homestead exemption.Mary de?faults on a $60,000 debt that she owes to Nina.Mary's home is sold at auc?tion for $80,000. -Refer to Fact Pattern 28-4B.Nina may recover

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

Fact Pattern 28-3B (Questions Dillon and Evan are brothers.They agree to act as guarantors on a loan made by their sister,Fiona.Fiona defaults on the payments and Dillon re?fuses to pay.Evan pays the debt. -Refer to Fact Pattern 28-3B.Evan can recover from Fiona under