Which of the following is true about both sureties and guarantors?
The arrangement is one in which the surety or guarantor agrees to pay the debt of another under certain circumstances.
The surety or guarantor becomes secondarily liable on the debt.
The obligation arises only if the debt cannot be collected from the primary debtor.
The bankruptcy of the primary debtor will release both the primary debtor and the surety or guarantor from the debt.
What is a guaranty arrangement?
An agreement under which the guarantor's property can be used to satisfy a debt on which the guarantor defaults.
An agreement that collateral can be sold without giving notice to the debtor.
A pledge by a debtor that a loan will be paid in accordance with its terms.
A promise to pay the debt of another if that other party defaults and the creditor has attempted unsuccessfully to collect the debt from the debtor.
If a debtor has a defense to the payment of a debt, can a surety or guarantor avoid paying the debt on the basis of the debtor's defense?
Yes, in the case of sureties, but not in the case of guarantors.
Yes, in the case of breach of contract, but not in the case of a discharge in bankruptcy.
Yes, in the case of a discharge in bankruptcy, but not in the case of breach of contract.
Yes, in the case of any defense.
Which of the following is/are a prejudgment collection remedy?
attachment and execution
Which of the following is/are a post-judgment collection remedy?
execution and garnishment
Sally agrees to be surety for her brother Dan in his purchase of a computer from a local dealer. The dealer extended $2,000 in credit to Dan to enable him to purchase the computer and took a security interest in the computer. The dealer does not file a financing statement. Dan does not pay for the computer because it is defective. The dealer repossesses it and sells it for $400, a reasonable amount. If the computer dealer seeks to recover from Sally, how much can it recover?
Nothing, because it did not file a financing statement.
Nothing, assuming the computer is really defective.
$1,600, but only if it has unsuccessfully tried first to collect from Dan.
John borrowed $20,000 from a bank, secured by his car. John had let his insurance lapse when the car was destroyed in a hurricane. John's only other assets are a boat that has no security interests associated with it and is in the garage at the house he rents, and a checking account at another bank with $600 in it. The bank sues John for payment of the $18,000 remaining balance on the car loan and obtains a judgment against John for that amount. If John does not pay this judgment, what can the bank do at this point?
Nothing, because the collateral has been destroyed.
Obtain a writ of garnishment on the boat and the bank account.
Have the sheriff attach the property.
Obtain a writ of execution on the boat and a writ of garnishment on the bank account.
When a debtor fails to pay a debt, and the value of the collateral is less than the full amount of the debt, which of the following is generally true?
Unless the state prohibits or limits the deficiency judgment, the creditor can obtain a deficiency judgment against the debtor for the amount of the debt that was not satisfied from the collateral.
The creditor must absorb the remaining loss and has no further remedy.
The creditor must file a bankruptcy proceeding against the debtor in order to obtain further relief.
The creditor must record its security interest before proceeding further.
What was the result in the case in the book in which Klondike attempted to recover Klondike bars in the possession of a debtor who went bankrupt?
Klondike was able to recover the Klondike bars because it had a security interest in them.
Klondike was able to recover the Klondike bars because payment had not been fully made.
Klondike was not able to recover the Klondike bars because it was found guilty of fraud.
Klondike was not able to recover the Klondike bars because it did not have a security interest in them.
Bankruptcy proceedings are commenced under __________.
local (city or county) law
state or federal law at the option of the debtor
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