Deck 36: Protecting the Creditor

Question 1

Property pledged as collateral must be in the possession of the creditor.

Answer 1

False

Question 2

A security agreement includes

A) the names of the parties.
B) the amount of the debt and terms of repayment.
C) the property in which the creditor has a security interest.
D) all of these.

Answer 2

D

Question 3

Shares of stock may serve as collateral for a loan.

Answer 3

True

Question 4

Property subject to a security agreement is called collateral.

Question 5

A security agreement must be signed by both the debtor and the creditor.

Question 6

A security agreement must be filed or it is invalid.

Question 7

A debtor's property may be seized and sold to pay off a debt.

Question 8

Tax liens are granted to a government agency to ensure the payment of property taxes.

Question 9

Before an unsecured creditor can seize a debtor's property and sell it to satisfy a debt, the creditor must first obtain a(n)

A) repossession order.
B) assignment.
C) replevin.
D) judgment.

Question 10

A contract of suretyship must be in writing to be enforceable.

Question 11

A creditor's claim to specific property of a debtor is called a judgment.

Question 12

A court order directing a debtor to pay an amount owed is called a(n)

A) judgment.
B) lien.
C) execution.
D) wage assignment.

Question 13

A secured creditor may repossess the debtor's property and sell it to pay the debt.

Question 14

A guaranty requires consideration to be enforceable.

Question 15

An unsecured debt

A) must be oral.
B) must be in writing.
C) may be either oral or written.
D) must be filed in the county clerk's office.

Question 16

A debt based solely on the debtor's promise to pay is a(n)

A) secured debt.
B) unsecured debt.
C) lien.
D) garnishment.

Question 17

A suretyship is terminated if the debtor and creditor change the terms of the agreement without the consent of the surety.

Question 18

If a creditor sells repossessed property, any amount remaining after paying the debt must be returned to the debtor.

Question 19

An architect not paid for services may file an artisan's lien.

Question 20

A debtor's promise to pay must be in writing to be enforceable.

Question 21

The major difference between guaranty and suretyship is

A) when they terminate.
B) the amount that can be guaranteed.
C) who is primarily responsible for repayment of the debt.
D) none of these.

Question 22

If a creditor believes that a debtor may sell or transfer assets, the creditor may ask the court to ____________________ the assets and hold them until a judgment is obtained.

Question 23

An agreement by a debtor permitting payment by an employer of a portion of the debtor's wages to a creditor is known as a(n) ____________________.

Question 24

A voluntary agreement by a debtor to have a portion of his or her wages turned over to a creditor to repay a debt is known as a(n)

A) garnishee.
B) voluntary judgment.
C) attachment.
D) wage assignment.

Question 25

A(n) ____________________ is a court order directing the debtor to pay the amount owed.

Question 26

A hotelkeeper's lien is placed on a guest's

A) bank account.
B) baggage.
C) real estate.
D) automobile.

Question 27

To be effective against third parties, a financing statement

A) must always be filed in a public office.
B) need never be filed.
C) must be filed if an automobile is involved.
D) need not be filed for a credit sale of business equipment.

Question 28

An auto repair shop not paid for its work on a car would have the following type of lien against the vehicle

A) artisan's lien.
B) mechanic's lien.
C) attachment lien.
D) judgment lien.

Question 29

A court-ordered process authorizing an employer to seize a portion of a debtor's wages is called

A) execution.
B) garnishment.
C) wage assignment.
D) repossession.

Question 30

Consideration is required for

A) a contract of guaranty.
B) a contract of suretyship.
C) a contract of guaranty and a contract of suretyship.
D) neither a contract of guaranty nor a contract of suretyship.

Question 31

A contract of guaranty would not be terminated if it were altered without the consent of the guarantor so as to

A) add an additional guarantor.
B) lengthen the term.
C) change the amount involved.
D) change the name of the debtor.

Question 32

An order permitting a creditor to seize a debtor's property to satisfy a debt is called a(n) ____________________.

Question 33

Property used to secure repayment of a loan is known as

A) lien property.
B) secured property.
C) collateral.
D) judgment property.

Question 34

The amount of a debtor's wages that may be taken by garnishment is

A) limited by federal law.
B) unlimited.
C) limited by state law.
D) limited by the Wage and Hour Law.

Question 35

An order to seize a debtor's property before a judgment is obtained is called a(n)

A) prejudgment.
B) attachment.
C) security agreement.
D) lis pendens.

Question 36

A contractor who is not paid for work done on a building may file a

A) contractor's lien.
B) builder's lien.
C) masonry lien.
D) mechanic's lien.

Question 37

A financing statement is filed to protect the

A) debtor.
B) creditor.
C) public.
D) creditor and the public.

Question 38

A creditor has an absolute right ____________________.

Question 39

A security interest created by law is called a(n)

A) attachment.
B) foreclosure.
C) judgment.
D) lien.

Question 40

A secured creditor may, if not paid,

A) seize the debtor's property and sell it at auction.
B) sue the debtor.
C) seize the debtor's property and sell it at a private sale.
D) all of these.

Question 41

Trella purchased a $1,200 piano on credit from the Corbett Company, signing a security agreement. Months later, Trella missed one payment. Corbett repossessed the piano and billed Trella for the balance of $300. Trella claimed that the piano was worth more than $300 and asked Corbett to sell it and return any excess money to her. Corbett refused. Was Corbett correct to refuse?

Question 42

Owens agreed to replace the roof on Barker's house and garage for $1,500. Owens completed the work, but Barker was unable to pay Owens the $1,500. What action can Owens take?

Question 43

A(n) ____________________ is filed in a public office when a security interest is no longer claimed in property of a debtor.

Question 44

The reason for filing a financing statement is to give notice to the ____________________.

Question 45

A security interest that is created by law is called a(n) ____________________.

Question 46

Albion sold Holly a motorcycle on credit. A security agreement was signed, but Albion failed to file it. Holly claims the security agreement is invalid. Is Holly correct?

Question 47

A special lien enabling a city to seize property because of unpaid taxes is called a(n) ____________________.

Question 48

One who agrees to pay a debt if the debtor defaults, but only after the debtor cannot or will not pay, is called a(n) ____________________.

Question 49

Blair Refuse Disposal contracted to haul trash from the Ogden Building. When the building owner failed to pay Blair's bill, Blair filed a mechanic's lien against the building. Is it permitted to do so?

Question 50

Central Bank refused to lend Gaines $3,000 unless Bronson, his father-in-law, agreed to act as surety. Bronson agreed. When Gaines was unable to repay the loan, the bank contacted Bronson. Bronson refused to pay, claiming that the bank must first sue Gaines to collect the money. Is Bronson correct?