<p>BLT&E-7e: Practice Quiz</p><p>Chapter 33: Creditors’ Rights and Remedies</p><p>1. LaVon contracts with Phil to remodel and retile Paul’s bathroom. LaVon finishes the job and gives Phil a bill for $14,000 for labor and materials. Phil refuses to pay. In this case, LaVon may seek: a. an artisan’s lien. b. an innkeeper’s lien. c. a mechanic’s lien. d. nothing—she may only bring a suit for breach of contract.</p><p>Answers:</p><p> a. Incorrect. This is not the kind of lien that LaVon would seek. b. Incorrect. LaVon is not an innkeeper and thus cannot get an innkeeper’s lien. c. Correct. Even though LaVon might not be a mechanic, she can get a mechanic’s lien because she improved Phil’s real property. d. Incorrect. LaVon may file such a suit, but she can also have a mechanic’s lien placed on Phil’s property.</p><p>2. What if, instead of agreeing to repair Phil’s bathroom, LaVon agreed to repair Phil’s antique grandfather clock at her shop. The price tag for the repairs is the same: $2,000. After the work is completed, Phil refuses to pay. Assuming that LaVon retains possession of the clock, what kind of lien may she seek to recover the cost of her labor? a. An innkeeper’s lien. b. A judicial lien. c. A mortgage lien. d. An artisan’s lien.</p><p>Answers:</p><p> a. Incorrect. LaVon is not an innkeeper, although she is presumably keeping the clock. b. Incorrect. She may not seek a judicial lien yet because there’s no hint that she’s brought a legal action yet. c. Incorrect. A mortgage lien is a lien on property securing the mortgage loan. d. Correct. LaVon may seek an artisan’s lien in order to recover payment for work on personal property—in this case, the clock. 3. In order to execute the lien she seeks in question #2, what MUST LaVon have? a. An attorney. b. A writ of execution. c. Possession of the car. d. A garnishment.</p><p>Answers:</p><p> a. Incorrect. LaVon may want to have an attorney to handle this, but she doesn’t need to have one. b. Incorrect. At this point, LaVon does not need a writ of execution. c. Correct. To execute an artisan’s lien, LaVon must still have the Cadillac in her possession. d. Incorrect. She does not need a garnishment.</p><p>4. Now assume that LaVon does not have the car any longer. One of her assistants mistakenly allowed Phil to drive it home, where he has it hidden in his garage. LaVon files a breach of contract claim against Phil. She also asks the court to order the sheriff or other officer to seize and take custody of the Cadillac before the trial, what is this court order called? a. A garnishment. b. A writ of attachment. c. A writ of certiorari. d. A suretyship.</p><p>Answers:</p><p> a. Incorrect. This is not a garnishment. b. Correct. LaVon is seeking a writ of attachment, which is a court’s order directing a sheriff or other official to seize and take custody of a debtor’s property before trial. c. Incorrect. This is not a writ of certiorari. d. Incorrect. This is not a suretyship. </p><p>5. Imagine now that LaVon won her suit against Phil and that he didn’t pay the judgment. Assume further than Phil crashed the beautiful 1957 Cadillac on the way back from the courthouse and that he has no other property to speak of. In other words, there’s no property that can be seized to satisfy the court’s judgment in LaVon’s case against Phil. What may LaVon do in this case? a. She’s out of luck now; there’s nothing left to do. b. She may sue for harassment. c. She may have Phil thrown into debtor’s prison. d. She may seek an order for garnishment. Answers:</p><p> a. Incorrect. LaVon may seek to have a portion of Phil’s future wages or part of any bank accounts he may have garnished. b. Incorrect. Phil isn’t harassing LaVon, so this wouldn’t work. c. Incorrect. There are no more debtor’s prisons. d. Correct. LaVon may seek a garnishment order from the court that gives her the right to receive some of Phil’s future wages or funds in his bank accounts (if he has any) in settlement of his judgment.</p><p>6. What is the usual method of foreclosure? a. Judicial sale of the property. b. Assignment of a redemption. c. Private sale to the debtor. d. Refinancing by the mortgagor.</p><p>Answers:</p><p> a. Correct. Statutory methods of foreclosure vary by state, but this is the usual method of foreclosure. b. Incorrect. This is not the usual method of foreclosure. c. Incorrect. This is not the usual method of foreclosure. d. Incorrect. This is not the usual method of foreclosure.</p><p>7. Kelly promises Mountain State Bank that she will be responsible for a loan taken out by her niece Dallas such that at the moment the debt is due, Mountain State may demand repayment from Kelly. This is known as: a. a bond. b. a suretyship. c. a foreclosure. d. a creditor’s composition agreement.</p><p>Answers:</p><p> a. Incorrect. The relationship between Kelly, Mountain State, and Dallas is not known as a bond. b. Correct. This is suretyship. c. Incorrect. This is not a foreclosure. d. Incorrect. This is not a creditor’s composition agreement, which is an agreement between a debtor and creditors to discharge a debt by payment of a sum less than that actually owed.</p><p>8. Which of the following actions will release a surety from his or her obligations? a. The failure of the debtor to pay. b. A change in the name of the creditor. c. The death of the debtor. d. A material modification of the terms of the original contract without the surety’s consent.</p><p>Answers:</p><p> a. Incorrect. If the debtor fails to pay, the surety must pay. b. Incorrect. A change in the name of the creditor will probably not release a surety because it is not a material modification of the original contract. c. Incorrect. If the debtor dies, the surety remains primarily liable on the debt. d. Correct. A material modification to the original contract will release a surety if the surety did not consent to the changes.</p><p>9. In each state of the United States, debtors are permitted to either retain their family home or keep up to a specified dollar amount of the value of the home. This is known as: a. the homestead exemption. b. a composition agreement. c. co-suretyship. d. a dominium interest.</p><p>Answers:</p><p> a. Correct. This is the homestead exemption; it allows debtors to shield their home, or some portion of the value of the home, from creditors. b. Incorrect. This is not a composition agreement. c. Incorrect. This is not a co-suretyship. d. Incorrect. This is not known as a dominium interest.</p><p>10. Which of the following is an example of personal property that normally WOULD NOT be exempt from the satisfaction of judgment debts? a. Pets and most livestock. b. Clothing. c. Jewelry. d. A vehicle for transportation.</p><p>Answers:</p><p> a. Incorrect. These items will be exempted. b. Incorrect. Clothing will be exempted. c. Correct. Jewelry normally will not be exempted and may be seized and sold to satisfy a judgment debt. d. Incorrect. A vehicle for transportation will be exempted. </p>