R6 Suretyship and Creditor's Rights

Question 1

What is a guarantor of collectibility?

Answer 1

• One who binds himself in writing to perform upon default of another and
• Creditor must exhaust remedies against debtor before collecting from surety (guarantor of collection)

Question 2

Generally, is a writing required in order for a surety to be liable?

Answer 2

Yes, a surety promise is required to be evidenced by a writing under the Statute of Frauds

Question 3

What are the surety’s rights against the principal?

Answer 3

• Exoneration (right to compel principal to pay)
• Subrogation (enforcement of creditor’s rights against principal)
• Reimbursement (right to recover from principal after surety pays)

Question 4

What are the surety’s rights against co-surety?

Answer 4

• Exoneration (right to compel co-sureties to pay pro rate share)
• Contribution (right of paying co-surety to collect from other co-surety the share co-surety should have paid)

Question 5

What are some potential defenses of surety?

Answer 5

• Forged signature
• Defrauded principal
• Duress upon principal
• Illegality of the principal’s obligations
• Non performance by creditor
• Impossibility
• Discharge of principal’s obligation
• Variations of the surety’s risk

Question 6

May a debtor’s social security payment be garnished?

Answer 6

NO, social security wages are not subject to garnishment under federal law

Question 7

The Fair Debt Collection Practices Act (FDCPA) prevents a creditor who is owed money from calling the debtor before 8:00am or after 9:00pm.
True or false?

Answer 7

False, the FDCPA applies only to debt collection agencies, it does not apply to creditors trying to collect a debt owed to the creditor.