R5 M5 - Suretyship Flashcards
What is judicial lien (post-judgment)?
The creditor wins in court for the debtor to pay the creditors what it owed. If the debtor refuses to pay, then the creditor can request the court to impose a lien (which a right the court gives the creditor to possess property owned/ possessed by the debtor)
To impose a lien, the court will issue a writ, to the local sheriff to take possession or seize the property of the debtor and sell it and the money is given to the creditor.
Which scenarios does a homestead exemption applies, and which scenarios does a homestead exemption does not apply ?
Homestead exemption Applies:
- A general creditor lends money to the debtor who refuses to pay, then the creditor cannot seize the house
Homestead exemption does not Apply:
- To a valid home mortgage lien ( PMSIs) Purchase money security interest in personal property or purchase money mortgages against real property.
-If you don’t pay your tax the government can go after your property.
What is purchase money security interest?
When a creditor lends money to the debtor and the debtor uses that money to pay for a mortgage or a car (collateral). If you don’t pay the creditors. So, Homestead exemption does not apply.
if you fail to pay your mortgage than the bank can go after the house.
Choice “B” is correct. Generally, a home mortgage lien is not subject to a state homestead exemption if it is a purchase money mortgage and neither is an IRS tax lien.
