Wiley CPAexcel Exam Review 2014 Study Guide, Regulation

Module 31: Debtor-Creditor Relationships

Overview

The first part of this module discusses the rights and duties of debtors and creditors. One of the important areas is the idea of a lien. Note the different types of liens and their effect on debtors and creditors. Also covered are the concepts of composition agreements with creditors and assignments for the benefit of creditors. These can be used as alternatives to bankruptcy.

A. Rights and Duties of Debtors and Creditors

B. Nature of Suretyship and Guaranty

C. Creditor’s Rights and Reme

D. Surety’s/Guarantor’s Rights and Remedies

E. Surety’s/Guarantor’s Defenses

F. Cosureties

G. Surety Bonds

Key Terms

Multiple-Choice Questions

Multiple-Choice Answers and Explanations

Simulations

Simulation Solutions

This module also discusses the concepts of guaranty and suretyship. These two are nearly the same concept. The main difference is that the guarantor is typically secondarily liable to the creditor, whereas the surety is normally primarily liable to the creditor. The rights and duties are otherwise almost the same for both the guarantors and the sureties. Before beginning the reading you should review the key terms at the end of the module.

A. Rights and Duties of Debtors and Creditors

1. Liens are creditors’ claims on real or personal property to secure payment of debt or performance of obligations

2. Mechanic’s lien or materialman’s lien

a. Statutory lien on real property (real estate) to secure payment of debts for services or materials ...