Chapter 31 - Other Creditors' Remedies and Suretyship

Question 1

Lien

Answer 1

A claim to property
types
1) Consensual lien – a secured interest in prop created by the agreement of parties
2) Statutory lien – a claim to prop created through statute
3) Mechanic’s Lien – a claim on real property as a result of labor or materials provided for benefit of property (super Priority)
4) Artisan’s Lien — a claim on personal property as a result of labor provided by a third party for the benefit of such property – possession required –(super priority)
5) Judicial Lien – repossession

Question 2

Judicial Lien

Answer 2

1) legal action of creditor seizing a debtor’s property to satisfy a debt
2) attachment –> a court ordered judgement permitting a local court officer to seize a debtor’s property
3) Writ of Execution: a document authorizing a law officer to seize the debtor’s nonexempt property
4) Garnishment: an order that satisfies a debt by seizing a debtor’s property that is being held by a third party, like a bank or employer

Question 3

Mortgage Foreclosure

Answer 3

the foreclosure and sale of mortgaged property to pay a debt

Question 4

Creditor’s composition agreement

Answer 4

A contract between crreditors and a debtor in which the creditors agree to accept a lesser amount to satisfy the debt and discharge the remainder of the debt

Question 5

Assignment for the benefit of creditors

Answer 5

The transer of the title of property to a trustee who sells the prop to pay the creditors on a pro rata (proportional) basis with the proceeds of the sale

Question 6

Suretyship

Answer 6

A contract between a debtor and a third party who agrees to pay another person’s debt and is thus primarily liable for the debt

Question 7

Gauranty

Answer 7

A third party, usually called the guarantor, who must pay the debt only after the debtor has defaulted and who is thus secondarily liable for that debt

Question 8

Defenses of the Surety and The Gaurantor

Answer 8

1) Statute of Frauds – Guarantee must be in writing
2) Discharge from the debt – debtor paid sum, debtor makes an agreement that alters the nature of the agreement without guarantor’s consent
3) own bankruptcy
4) Debtor’s Fraud

Question 9

Rights of Surety and Guarantor

Answer 9

1) Right to subrogation – surety is entitled to all rights creditor had against the debtor
2) Right to Reimbursement – guarantor can recover the actual amount of the debt paid to the creditor as well as legal expenses against the debtor for reimbursement
3) Right of Contribution – Other Sureties or guarantors must pay their equal shares

Question 10

Homestead Exemption

Answer 10

1) allows a debtor to retain a portion or all of fmaily home even though debtor is unable to pay debts
2) varies state to state , no limit in FL, TX no exemption in NJ

Question 11

Exempt Items (usually)

Answer 11

1) household goods (up to a set value)
2) clothing
3) equity in a vehicle (To A set value)
4) tools and instruments used to carry on a trade
5) debtors responsibility to claim exempt items