Creditors' Rights Flashcards
When will a party not be held liable on a negotiable instrument?
When it does not bear her signature or the signature of an authorized representative
Feb 2021
What is the doctrine of “necessaries?”
Requires both spouses to pay for their children (and one another’s) necessary items, including food, clothing, shelter, medical care, and legal expenses
* Where a party does not sign a note, but shares a duty (e.g., medical expenses for child) to pay, they will be subject to judgment
What type of property is protected from the judgment of creditors?
Property held in tenancy by the entirety but NOT property held as joint tenants with right of survivorship
* Where property held in tenancy by the entirety, it is not subject to the individual debts of either owner so long as the tenancy by the entirety continues
Feb 2021, Feb 2018, Feb 2015
What is the presumption about bank accounts owned by a husband and wife?
That they own it equally
* Where a creditor has a judgment against only one spouse, and that bank account is not held in a tenancy by the entirety, (e.g., JTWRS) the judgment debtor’s half of the bank account can be reached (creditor will get a lien on their half)
* Rebutted by clear and convincing evidence that the debtor contributed more
Feb 2021, Feb 2018
How should a creditor proceed after a judgment order to reach a party’s bank account?
- Wait 21 days (in CC)
- File a “Suggestion in Garnishment,” which requests the Clerk’s Office of the court where the jugment was entered, to issue a writ of execution and garnsishment on the parties’ bank account and to reach the judgment debtors’ shares in the bank account
Feb. 21
What property may be claimed in a homestead exemption?
- Any property worth up to $5,000 ($10,000 if 65 or older)
- Can be used for an additional $25,000 in real or personal property used as the principal residence of the claimant or the claimant’s dependents (and $500 may be claimed for each dependent of household)
Feb. 21
What is a mechanic’s lien in personal property?
A lien for “just and reasonable charges” for alterations or repairs to a piece of personal property
July 2020
How much, and against whom, may a mechanic’s lien be asserted for?
May be asserted against the lawful possessor for up to $1,000
* A lawful possessor includes both the owner and a security interest (i.e., “takes priority” over security interest)
July 2020
What is the priority of a mechnic’s lien in personal property?
It has priority over competing security interests if the repair was made in the ordinary course of business and the property remains in their possession
July 2020
How may a judgment lien arise on real property located in another county?
When the judgment from a VA court in one jurisdiction is docketed in a VA Circuit Court in another jurisdiction, it will create a jdugment lien on any real estate owend by the judgment debtor in the jurisdiction where the judgment was recorded
* Bring equitable action seeking partition of the debtor’s interest (enforced by judicial sale if rents and profits from land will NOT pay judgment in five years)
July 2020, Feb 2013, Feb. 2018
What are the two types of creditors for purposes of a fraudulent conveyance?
(1) Present creditors, whose claims arose before the transfer being attacked; and
* Can avoid voluntary OR fraudulent conveyances
(2) Future creditors, whose claims arose after the transfer was made
* Can avoid only fraudulent conveyances
July 2018, July 2017, Feb 2013
What is a “fraudulent” conveyance?
Conveyance with the intent to delay, hinder, or defraud any creditor unless the conveyance is to a BFP for value without notice
* Look for “badges of fraud,” like no consideration
* Need clear and convincing evidence it was fraud
July 2018, July 2017, Feb 2013
What is the effect of a perferential transfer to a creditor on a fraudulent conveyance analysis?
A preferential transfer to a bona fide creditor may not be set aside to the extent an atecedent debt is satisfied
* An insolvent debtor may generally make a transfer of his assets to a bona fide creditor on account of an existing indebtedness
July 2018, July 2017, Feb 2013
What is a voluntary conveyance?
Conveyances made for less than FMV (failing to be “upon consideration deemed valuable at law”) while the debtor is insolvent or which renders the debtor insolvent
* Transfers between an indebted spouse and the other spouse are presumed voidable (may rebut by showing of consideration or bona fide gift)
July 2018, July 2017, Feb 2013
What is the effect on transferes of a fraudulent conveyance?
(1) With knowledge–transferee loses property
(2) BFP–one who pairs fair consideration without notice keeps property
(3) No notice, but less than fair consideration–purchaser must give up property, but gets lien on it for amount paid to debtor
July 2018, July 2017, Feb 2013
