Chapter 29

When a debtor fails to pay as promised.

Is an encumbrance on (claim against) property to satisfy a debt or protect a claim for the payment of a debt. These may arise under the common law (usually by possession of the property) or under statutory law.

This creates a special type of debtor-creditor relationship in which the real estate itself becomes security for the debt.

This lien is possessory. The lien-holder ordinarily must have retained possession of the property and have expressly or impliedly agreed to provide the services on a cash, not a credit, basis.

In the context of judicial liens, this refers to a court-ordered seizure and taking into custody of property before a judgment is obtained on a past-due debt. Because it is a pre-judgment remedy, it occurs either at the time a lawsuit is filed or immediately afterward.

When the court is satisfied that all the requirements have been met, it issues this. It direct the sheriff or other officer to seize the debtor's nonexempt property. If the creditor prevails at trial, the seized property can be sold to satisfy the judgment.

This is an order that directs the sheriff to seize (levy) and sell any of the debtor's nonexempt real or personal property.

This order permits a creditor to collect a debt by seizing property of the debtor that is being held by a third party.

Creditors may contract with the debtor for discharge of the debtor's liquidated debts (debts that are definite, or fixed, in amount) on payment of a sum less than that owed. These are usually held to be enforceable unless they are formed under duress.

Made in cash typically when purchasing real property.

A written instrument that gives the creditor a lien on the debtor's real property as security for payment of a debt.

This requires the borrower to pay a penalty if the mortgage is repaid in full within a certain period. This helps to protect the lender should the borrower refinance within a short time after obtaining a mortgage.

This protects the lender's interest in the event of a loss due to certain hazards, such as fire or storm damage.

Another creditor protection that is required by most contracts if debtors do not make a down payment of at least 20% of the purchase price or the real property.

This is the legal process by which the lender reposesses and auctions off the property that has secured the loan.

This is a postponement of part or all of the payments on a loan for a limited time. This option works well when the debtor can solve the problem by securing a new job, selling the property, or finding another acceptable solution.

This is a contract that describes the respective rights and responsibilities of the borrower and the lender as they try to resolve the default.

This is a sale of the property for less than the balance due on the mortage loan. Typically, the borrower has to show some hardship. The lender often has approval rights in this, so the sale process may take much longer than an ordinary real estate transaction.

Every state allows a defaulting borrower to redeem the property before the foreclosure sale by paying the full amount of the debt, plus any interest and costs that have accrued. This gives the defaulting buyer a chance to regain title and possesion after default.

A contract of this is a promise made by a third person to be responsible for the debtor's obligation. It is an express contract between the third party and the creditor.

The third party in a suretyship

The third person making the guaranty

Any right that the creditor had against the debtor now becomes the right of the surety. Included are creditor rights in bankruptcy, rights to collateral possessed by the creditor, and rights to judgments obtained by the creditor.

In short, the suretyuarantor now stands in the shoes of the creditor and may pursue any remedies that were available to the creditor against the debtor.

The suretyuarantor is entitled to receive from the debtor all outlays made on behalf of the suretyship arrangement.

Two or more sureties are called this. When one pays more than their proportionate share on a debtor's default, they have a right of contribution.

This means the co-surety is entitled to recover from the other co-sureties the amount paid above the surety's obligation. Generally, a co-surety's liability either is determined by agreement or, in the absence of agreement, is set at the maximum liability under the suretyship contract.

The most familiar exemption of real property. The purpose of this is to ensure that the debtor will retain some form of shelter.