21- Debtor & Creditor Relationships - Suretyship Flashcards
What happens when a creditor releases one of the co-sureties?
This reduces the amount the other co-sureties may recover as contribution. Creditor loses rights against other co-sureties to the extent they can no longer recover a contribution from the released party.
What is a contribution?
Contribution refers to the specific right of the co-surety to recover from the other co-sureties a proportionate share of the liability as spelled out in the co-surety agreement
When musta debt collector stop communicating with the debtor?
When the debtor is represented by an attorney.
What is Subrogation?
Subrogation allows the surety to obtain the creditor’s rights against the debtor. Such as security interest in loan collateral
What is Exoneration?
Exoneration refers to a suit by the surety to compel the debtor to pay the creditor, and is no longer relevant once the surety has paid the creditor.
Can the debtor demand payment from a surety?
A surety is primarily liable for the debt along with the principal debtor. The creditor can demand payment from the surety without first proceeding against the debtor or the collateral.
When is a compensated surety totally released?
Once the debtor tenders payment to the creditor, the surety is released whether or not the creditor accepts the payment.
What are official bonds?
An official bond is a type of security bond where the surety guarantees that public officials will faithfully execute their duties.
What is an assignment for the benefit of creditors?
Transfers assets to a trustee for the purpose of liquidation and satisfaction of debts. This does not offer release if the sales proceeds are inadequate to pay all amounts owed.
What is Composition of creditors?
A composition agreement releases the debtor from its debts in exchange for the settlement included in the agreement.
