R5 Module 5

Question 1

what is a guarantor of collectability?

Answer 1

a surety who agrees to perform only if the creditor first exhausts all remedies against the principal debtor
-guaranty must be in writing

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. If not in writing, not liable

Question 3

what are the surety’s rights against the principal?

Answer 3

1) Exoneration (right to compel principal to pay)
2) Subrogation (enforcement of creditors’ rights against principal)
3) Reimbursement (right to recover from principal after surety pays)

Question 4

What are the surety’s rights against cosureties?

Answer 4

1) Exoneration (right to compel cosureties to pay pro rata share)
2) Contribution (right of paying cosurety to collect from other cosurety the share should have paid)

Question 5

What are some potential defenses of a surety?

Answer 5

1) forged signature
2) defrauded principal (creditor must have been aware of fraud)
3) duress upon principal (if creditor knew of duress)
4) illegality of principal’s obligations
5) nonperformance by creditor
6) impossibility
7) discharge of principal’s obligation
8) variations of surety’s risk

Question 6

may a debtor’s social security payments be garnished?

Answer 6

No. SS payments are not subject to garnishment under federal law.

Question 7

The Fair Debt Collection Practices Act prevents a creditor who is owed money from calling the debtor before 8 a.m. or after 9 p.m.

Answer 7

False. The Fair Debt Collection Practices Act applied to debt collection agencies; it does not apply to a creditor trying to collect a debt owed to the creditor

Question 8

what sureties cannot do

Answer 8

do not have right to compel creditor to collect from principal debtor or proceed against principal because surety is primarily responsible on debt surety agrees to backstop

Question 9

cosurety rights

Answer 9

1) right of contribution from cosureties, allowing cosurety to recover from other cosureties pro rata share of payment
2) where debt has been reduced, cosurety remains liable for lesser of 1) reduced amount of debt OR 2) original amt which cosurety agreed to be responsible

Question 10

subrogation

Answer 10

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 11

exoneration

Answer 11

the right a surety has against the debtor to force the solvent debtor to pay a debt when the debtor refuses to do so

Question 12

contribution

Answer 12

a right one surety has against the surety’s cosureties to force them to pay their share of the debt

Question 13

attachment

Answer 13

attachment is a remedy with respect to the property of the debtor-principal

Question 14

when one of several co-sureties becomes bankrupt

Answer 14

other co-sureties are liable on the debt to the extent each agreed and are liable in contribution to each other in proportion to the amt each agreed to pay

Question 15

what actions result in total release of compensated surety?

Answer 15

tender of performance by the principal debtor completely releases surety, even a compensated surety, must have full payment to be released

Question 16

what releases a noncompensated surety from liability of creditor?

Answer 16

if the principal debtor and creditor modify the terms of the contract in any way. A partial surrender of debtor’s collateral is a modification that will release noncompensated surety from liability

Question 17

when one co-surety is discharged

Answer 17

the release of one co-surety without the consent of the other co-surety discharges the remaining co-surety’s right of contribution from released co-surety and discharges remaining co-surety to extent released party was liable. So it reduces remaining co-surety liability

Question 18

actions between debtor and its creditors that generally cause debtor’s release from its debts

Answer 18

a composition of creditors is an agreement between a debtor and at least two creditors that creditors will take less than full payment to discharge debts owed by debtor to creditors who participate in composition agreement.

Question 19

assignment for the benefit of creditors

Answer 19

a transfer of some or all of a debtor’s property to a trustee who then uses the property to pay the creditors

Question 20

liens that require leinholder to give notice of legal action before selling debtor’s property to satisfy debt

Answer 20

1) Mechanic’s lien (improvements made on real property)
2) Artisan’s lien (improvements made to personal property)

Question 21

prejudgment remedies available to a creditor when debtor owns no real property

Answer 21

1) writ of attachment (an order by court to a sheriff to seize person’s real or personal property)
2) garnishment

Question 22

Garnishment

Answer 22

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 third person to the debtor. No requirement property be debtor’s real property

Question 23

violating proper debt collection practices under Federal Fair Debt Collection Practices Act results…

Answer 23

in civil lawsuit for damages for violating the Act
-FDCPA gives parties injured by unfair collection practices right to sue for damages. 15 USC 1692k(a)(1)

Question 24

indications a debtor is concealing or transferring property to prevent creditor from satisfying judgment under fraudulent conveyance

Answer 24

1) debtor remaining in possession after conveyance
2) secret conveyance
3) debtor retains an equitable benefit in property conveyed

Question 25

conveyance

Answer 25

the process of transporting property from one place to another

Question 26

Under FDCPA, a debt collector can be prevented from:

Answer 26

communicating with a debtor who is represented by an attorney
-it does not stop creditors from continuing to collect debt, sue debtors to collect debts or keep them from asking third party of debtor’s whereabouts