Debtor-Creditor Relationships: Rights Duties and Liabilities

Question 1

The surety

Answer 1

can only go after the debtor after the debtor defaults.

can go after other surety’s for difference in excess payment (Contribution)

Question 2

What would be considered fraudulent conveyence

Answer 2

Retaining possession
Secret conveyance
retain interest benefit in property conveyed

Question 3

Even if there was fraud committed

Answer 3

the surety is liable unless they can prove that the creditor knew of the fraud

Question 4

When an arrangement of transferred property for payment does not involve the consent of the creditors

Answer 4

the debtors will not be released from liability for any balance

Question 5

what Successful defenses can be used against the Holder in Due course?

Answer 5

Fraud of the Execution
Discharge in Insolvency
Infancy, to the extent of a simple contract

Question 6

What defenses can be used by the Surety against the debtor?

Answer 6

1) Reimbursement/indemnity: Get the debtor to pay the guarantor/surety the amount they owe to the creditor
2) Subrogation: grantor/surety discharges principal debtor debt to the creditor and they surety assume all the creditor’s rights
3) Contribution: sue other creditors/guarantors for excess payment
4) Exoneration: allows surety’s to sue debtor to pay the creditor
5) Lack of consideration

Question 7

A debtors tendered performance

Answer 7

will always release a compensated surety

Question 8

According to the statue of frauds

Answer 8

all promises and suretyships must be in writing

Question 9

A creditor

Answer 9

must attempt to collect from the debtor before going after the suretys

Question 10

In a Composition of creditors agreement

Answer 10

a debtor agrees (with the creditors) to pay the creditors a fraction of the outstanding debt. (it discharges the debtor)