Suretyship

Question 1

Discharged of suretyship

Answer 1

A noncompensated surety will be discharged from liability if the principal debtor and the creditor modify the terms of the contract in any way. A partial surrender of the debtor’s collateral is a modification that will release a noncompensated surety from liability.
The principal’s duress will discharge the surety’s obligation only if the creditor knew about the duress when the creditor accepted the surety

Question 2

debtors rights

Answer 2

Federal law does not allow creditors to institute garnishment proceedings with
respect to federal social security benefits

Question 3

Surety release

Answer 3

. Tender of performance by the principal debtor completely releases the surety, even
a compensated surety

Question 4

subrogation

Answer 4

.Subrogation is the right a surety has by which the surety succeeds to the creditor’s rights against the principal when the surety pays the principal’s obligations

Question 5

In surety fraud is not a defence

Answer 5

Fraud on the surety by the principal debtor is not a defense unless the creditor
knew of the fraud.

Question 6

Surety

Answer 6

A surety generally is primarily liable on the debt the surety agrees to backstop and
has no right to compel the creditor to collect from the principal debtor or to compel the creditor to
proceed against the debtor’s collateral. (There is, however, a very limited right to both of these in certain
circumstances.)

Question 7

assignment and composition

Answer 7

A composition of creditors is an agreement between a debtor and at least two creditors that the creditors will take less than full payment to discharge the debts owed by the debtor to the creditors who participate in the composition agreement. The agreement results in discharge of the debts in full because a contract is created by the cross-promises of the parties (i.e., the cross-promises serve as consideration, so the pre-existing duty rule is avoided). On the other hand, an assignment forthe benefit of creditors is a transfer of some or all of a debtor’s property to a trustee who then uses the property to pay the creditors. There is no discharge of debts here because the creditors have not enteredinto any contract to take less than full payment

Question 8

creditor remedies

Answer 8

A writ of attachment is an order by the court to a sheriff to seize a person’s
property. The writ can apply to personal property and to real property, and so the writ can be used even
when a person owns no real property. Garnishment is an order to a third person who holds property of
the debtor to turn the property over to a creditor. The property involved usually are wages and/or other
property owed by the third person to the debtor. There is no requirement that the property be the debtor’s
real property