Exam 24: Other Creditors Remedies and Suretyship

Fact Pattern 24-1 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 24-1. If, after the loan agreement is signed, Slick agrees to a higher rate of interest without telling Tina, then Tina is

A surety can be required to pay an obligation only after the principal debtor defaults and usually only after the creditor has made an attempt to collect from the debtor.

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

Michael contracts with Jill to fix the brakes on her Honda Civic. Jill leaves her car with Michael, but refuses to pay when the work is done. Michael refuses to return the car until she pays. Michael's lien on Jill's car will end

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

A surety can assert the debtor's bankruptcy as a defense.

Oliver borrows money from Peerless Loan Company. For Peerless to obtain a writ of execu?tion, Oliver must

Custom Cabinets & Carpentry Company has a claim against Duane's property to satisfy a debt that takes priority over other claims against the same property. This is

A writ of execution is a writ that puts in force a court decree or judgment.

Portia owes Bon $500 on their contract, but refuses to pay. To collect, Bon files a me?chanic's lien, under which security for the debt is repre?sented by

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

Abner owes Borrowers Bank $15,000 but refuses to pay. Borrowers wants to ob?tain a garnishment order and serve it on Abner's employer, Café de Jeuner. What is the procedure for obtaining a garnishment order? Is one order enough to garnish all of Abner's wages for each pay period until the debt is paid? Can Abner's employer dismiss him due to the garnishment?

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

A guaranty contract must always be in writing to be enforceable.

Dina asks Edie to co-sign a credit application so that she can borrow money and buy a truck from First Street Motors. If, after the loan agreement is signed, Dina agrees to a higher rate of interest without telling Edie, then Edie is

Fact Pattern 24-1 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 24-1. If Tina signs the application only after lan?guage is included that requires Petro to exhaust its legal remedies against Slick before looking to her, then Tina is

Creditors can agree with a debtor to discharge the debtor's debts on payment of a sum less than that owed.

A lien is an encumbrance on property to satisfy a debt or protect a claim for the payment of a debt.

Builders Construction Company performs a contract with Christina to add a sun porch to her house, but she does not pay. In most states, Builders Construction could create a lien and place it on Christina's property by filing

Consumer Credit, Inc. (CCI), lends $1,000 to Joe. Kay acts as Joe's surety. If Kay pays the loan, she gets