Exam Review SU#20 Flashcards
The bonds that are an obligation to a surety is
Official Bonds: a statute may require public officers to provide bonds to secure the appropriate performance of their duties. The surety is obligated for losses caused by the negligence or nonperformance of the official
What rights does one cosurety have against another cosurety
Contribution: is the right of a cosurety who has paid more than her proportionate or agreed-to share to proceed against the other cosureties
Under Chapter 11 of the Bankruptcy Code
Creditors & shareholders accept, not confirm plans for reorganization. Confirmation is performed by the bankruptcy court. The holders of more than 50% of the creditors claims representing at least 2/3 of the dollar amount of the claims must accept. A class of equity shareholders accepts the plan if holders of at least 2/3 in dollar amount of the interest approve the plan.
A mortgagor’s right of redemption will be terminated by a judicial foreclosure sale unless
The jurisdiction has enacted a statutory right of redemption which provides the mortgagor with the opportunity to repurchase the property after the foreclose sale, for a certain period not exceeding 1 year
Which events will release a surety from liability
Modification by the principal debtor & the creditor of their contract that fundamentally increases the surety’s risk of loss or creates a substituted contract operates to release a surety from liability unless she consents to the modification
Which statement describes the effect of the entry of the court’s final decree under chapter 11
an entity is granted chapter 11 status will be discharged from its debts & liabilities that occurred prior to the confirmation of the plan. The effect of confirmation is to make the plan binding on all parties and to grant the debtor a discharge from claims not protected by the plan
Artisan’s & mechanic’s liens have
priority over all other security interests in property, unless a statute expressly provides otherwise
Consent of creditors is
NOT required of assignment and is similar to a composition
Bankruptcy is
a formal alternative means of resolving the conflict between creditor rights and debtor relief. The objectives are to ensure that
- debtor assets are equitably distributed to creditors
- the debtor is given a fresh start
A secured creditor may
petition the court to recognize the priority of the existing security interest and to grant relief from the automatic stay, thus permitting foreclosure
Abuse is found when
- the debtor does not pass the means test
2. general grounds exist for the finding
The estate consists of
all debtor’s nonexempt legal & equitable interests in property at the beginning of the case
Which debtors are eligible for exemptions
Only individual debtors, not corporations
The trustee can void a transfer of preferential assets that occurred within
90 days prior to filing the petition
Tradespeople who extend unsecured credit in the ordinary course of business after filing of an involuntary petition
have priority over unsecured general creditors
In Chapter 7
certain debts are not covered bay a chapter 7 discharge, they remain binding on the debtor but do not preclude a general discharge
A discharge previously granted may be revoked within
1 year if the trustee or a creditor proves that
- the discharge was obtained fraudulently
- the debtor knowingly & fraudulently retained property of the estate
- the debtor failed to obey a court order
Chapter 13 provides for
adjustments of debts of an individual. Its focus is on payment from future income. Thus, it may be preferable to liquidation because the debtor often is able to retain more assets
A grantor is
secondarily liable for the debtor’s obligation
The following defenses are available to the debtor but not the surety
- The debtors incapacity due to infancy or mental incompetence
- Discharge of the debtors obligation in bankruptcy
- A debtors claim against the creditor for set-off
A surety is
primarily liable for the debtors obligation. A creditor may proceed directly against the surety upon default. A guarantor has secondary liability;
A claim will not be discharged in a bankruptcy proceeding if it
Arises from an extension of credit based upon false representation
The bankruptcy estate consists of
all the debtors legal & equitable interests in
- Property
- Life insurance proceeds
- Property from divorce settlements
- inheritances received within 180 days of the commencement of bankruptcy proceedings
Under the federal bankruptcy code, which rights or powers does a trustee in bankruptcy NOT have
- The right to avoid any statutory liens against the debtor’s property that were effective before the bankruptcy petition was filed
When a principal debtor defaults & a surety pays the creditor the entire obligation, the remedies available to the surety are
Subrogation: is the right to succeed to the legal rights of the creditor against the principal debtor, cosureties, or any collateral
