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66. Open accounts usually require full payment within a fixed time period.
a. True
b. False
67. Consumer credit accounts are often installment accounts.
a. True
b. False
68. The first step in the collection process is typically a visit from the creditor's attorney.
a. True
b. False
69. A customer who is insolvent is able to make only partial payments on credit accounts.
a. True
b. False
70. A general creditor is also referred to as an unsecured creditor.
a. True
b. False
71. A general creditor usually collects nothing in the event the debtor defaults on the debt and is insolvent.
a. True
b. False
72. A general creditor usually collects on a debt owed by an insolvent debtor by taking collateral from the debtor to sell
for debt payment.
a. True
b. False
73. A secured creditor is one is able to take a non-paying customer's property to satisfy the customer's debt.
a. True
b. False
74. A creditor may be secured by operation of the law only, all other means of securing loans are not enforceable.
a. True
b. False
75. The law governing secured loans for personal property is found in Art. 2 of the UCC.
a. True
b. False
76. To be enforceable, a security interest must be detached from the debtor.
a. True
b. False
77. A suretyship is a guarantee by the debtor that he will repay his loans.
a. True
b. False
78. In a suretyship arrangement, the person borrowing the money is known as the principal.
a. True
b. False
79. A guarantor is the same as a surety.
a. True
b. False
80. If you sign a personal promissory note to cover debts owed by your business and the business fails, you will be held
personally liable on the debt.
a. True
b. False
81. One of the most common defenses a surety may raise is that material changes were made to the debt contract,
thus releasing the surety.
a. True
b. False
82. In General Electric Business Financial Services v. Silverman, where Silverman and his partners guaranteed a
loan made to a partnership that defaulted on the loan, the court held that the partners were liable on the loan.
a. True
b. False
83. In General Electric Business Financial Services v. Silverman, where Silverman and his partners guaranteed a
loan made to a partnership that defaulted on the loan, the court held that the partners were not liable on the
guarantee because of fraud in the transaction.
a. True
b. False
84. One of the most common defenses of sureties is bankruptcy.
a. True
b. False
85. A surety has the right to exoneration if the principal can pay her debt, but refuses to do so.
a. True
b. False
86. A principal has the right to assert any rights the creditor could have asserted against the debtor, including taking
security interests.
a. True
b. False
87. A principal has rights to be subrogated by the surety.
a. True
b. False
88. To make a security interest subject to better enforcement, the creditor should make sure the interest is attached and
perfected.
a. True
b. False
89. To attach a security interest, the agreement must be filed for public inspection.
a. True
b. False
90. To attach a security interest, the agreement must be signed by the debtor.
a. True
b. False
91. Perfecting a claim to a security interest may involve filing the claim with a state official.
a. True
b. False
92. Under the UCC, a security interest in consumer goods perfects automatically when the consumer signs the
agreement.
a. True
b. False
93. Most security interests are perfected when filed for public inspection with the secretary of state, county clerk, or
similar official.
a. True
b. False
94. The UCC prohibits the use of "floating liens" that keep carrying forward against a debtor when more supplies are
added to an existing account.
a. True
b. False
95. A floating lien must be renewed each time a customer purchases more goods on credit to add to the account.
a. True
b. False
96. When a customer is unable to meet its repayment obligations the customer defaults.
a. True
b. False
97. Under the UCC, a secured party may repossess property in which it has a security interest, in any manner it deems
necessary.
a. True
b. False
98. Under the UCC, a secured party may repossess property only upon receipt of a warrant.
a. True
b. False
99. Under the UCC, a secured party may repossess property only if assisted by a sheriff or other law enforcement
official.
a. True
b. False
100. In Fordyce Bank v. Bean Timberland, where the bank had a security interest in proceeds from the sale of timber
by Bean, the court held that the buyers of timber were liable for not ensuring payment went to the bank instead of
to Bean.
a. True
b. False
101. In Fordyce Bank v. Bean Timberland, where the bank had a security interest in proceeds from the sale of timber
by Bean, the court held that the bank failed to secure its interest in the timber, so it had no claim upon default.
a. True
b. False
102. In Fordyce Bank v. Bean Timberland, where the bank had a security interest in proceeds from the sale of timber
by Bean, the court held that timber buyers had no knowledge of the bank's interest so were not responsible for its
loss on the loan to Bean.
a. True
b. False
103. The only property that is typically exempt from attachment is personal property worth over $1,000.
a. True
b. False
104. Many states provide a homestead exemption to protect a debtor's housing from being attached in debt proceedings.
a. True
b. False
105. Real estate is typically financed by borrowing money and securing the loan with a mortgage.
a. True
b. False
106. In most states a mortgage on real estate is a lien.
a. True
b. False
107. The mortgagee is the creditor who makes a mortgage.
a. True
b. False
108. The mortgagee is the debtor who obtains a mortgage.
a. True
b. False
109. According to the Statutes of Fraud, mortgages may be either oral or in writing.
a. True
b. False
110. UCC Article 3 governs most mortgages, although a few states have not adopted that article and rely on common
law.
a. True
b. False
111. To protect the rights of the mortgagee, a mortgage should be recorded with a state official.
a. True
b. False
112. In case a borrower defaults on a mortgage, the mortgagee has an absolute right to dispose of the property in any
manner desired.
a. True
b. False
113. Only debtors may obtain liens.
a. True
b. False
114. The security interest in a lien is usually nonconsensual (not by consent of the debtor).
a. True
b. False
115. The law governing liens is found in Art. 9 of the UCC.
a. True
b. False
116. A garnishment is when a creditor gets the right to attach a certain percentage of a debtor's wages.
a. True
b. False
117. A mechanic's lien is the most common lien on personal property.
a. True
b. False
