Exam 28: Creditors Rights and Remedies

An artisan's lien is effective only if a creditor has possession of the property.

Dora, Ed, and Fran are co-sureties of Glen's debt to Hi-Credit Company. Dora pays Glen's entire debt. Dora's right to seek proportionate pay?ments from Ed and Fran is the right of

Fact Pattern 28-1A Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from Finest Quality Motors. -Refer to Fact Pattern 28-1A. If Edie signs the application only after lan?guage is included that requires Finest to exhaust its legal remedies against Dina before looking to her, then Edie is

Federal law disallows the use of state homestead exemptions.

If the proceeds of a foreclosure sale cover the costs and the mortgage debt, any surplus is a windfall to the creditor.

A surety is released from his or her obligation if the debtor pays it.

Elbert obtains a mortgage on his home from First National Bank. Elbert de?faults on his mortgage pay?ments, and First National brings a foreclo?sure action against him. Before the house is sold, can Elbert prevent the sale and reclaim his home?

State law governs mechanic's liens.

A creditor with a mechanic's lien on property can sell the property to sat?isfy the debt.

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 homestead exemption allows a debtor to pay a fixed debt for an amount less than was actually owed.

A creditor's composition agreement are enforceable.

Fact Pattern 28-1A Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from Finest Quality Motors. -Refer to Fact Pattern 28-1A. If, after the loan agreement is signed, Dina agrees to a higher rate of interest without telling Edie, then Edie is

An employer can dismiss an employee due to garnishment for one debt.

A writ of execution is a court order to seize a debtor's property after the entry of a final judgment in a creditor's lawsuit against the debtor.

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

Bob owes $5,000 to Consumer Lender Corporation (CLC). As a prejudg?ment remedy to collect the debt, CLC could use

Fact Pattern 28-1B Beta Software Corporation is a new company that needs to borrow money to meet its payroll. Cliff, president and owner of Beta, asks First National Bank to loan Beta the funds. -Refer to Fact Pattern 28-1B. If First National insists that Cliff sign the loan applica?tion, making himself personally liable for payment only if Beta de?faults, Cliff will be

Clothing is not included in state exemption statutes.

A mortgagee can obtain a deficiency judgment against a defaulting debtor only in a state in which there is no equity of redemption.