Exam 25: Security Interests and Creditors Rights

A secured party is any creditor who has a security interest in a debtor's collateral.

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

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

Oscar refuses to pay Petra $500 in cash on their contract to repair Oscar's washing machine,which Petra still possesses at her repair shop. Petra's lien on the machine will terminate

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 25-1. If,after the loan agreement is signed,Slick agrees to a higher rate of interest without telling Tina,then Tina is

A security agreement does not need to contain a description of the collateral.

A surety is primarily liable for the debt of a principal.

An employee can be discharged due to a garnishment order.

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

Where and how to perfect a security interest sometimesdepends on the classification of the collateral.

Raoul is a surety for Suzu's loan from Turnkey Credit,Inc. Raoul's right to "step into the shoes" of Turnkey,after paying Suzu's debt,and exer-cise any of the Turnkey's rights against Suzu is the right of

In some states,a judgment creditor must obtain a separate order of gar-nishment to cover each of the debtor's pay periods.

When more than one party claims an interest in the same collateral,a perfected secured party's interest has priority over the interests of most other parties.

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 ex-tend the time for repayment unless Smartt can provide an acceptable surety. Uno Venture Corporation agrees to act as a surety for the loan af-ter 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?

When a debtor fails to pay for labor and materials furnished for the repair or improvement of personal property,a creditor can recover payment through a mechanic's lien.

Sasha's debt to Tully is past due. Tully brings a legal action against Sasha to collect the debt. To ensure that a judgment in Tully's favor will be collectible,he asks the court to order the seizure of Sasha's property. This is a request for

Debit & Credit Financing,Inc.,and Equity Lending Company are secured parties with security interests in property owned by Fleet Shipping Corporation. Priority between these security interests is generally determined by

In the context of judicial liens,an attachment is a court-ordered seizure and taking into custody of prop-erty before a judgment is obtained on a past-due debt.

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

A purchase-money security interest (PMSI)in consumer goods is perfected automatically when the PMSI is created.