Case 4: Vulture Loan Vs. Chapte Part 2

Decent Essays

Part 1: A. Umberto’s agreement is a surety contract because Umberto signed as a surety before Rashi went into default. This contract is to answer for the debt of another. The contract with the lender, Vulture Loans, Inc., provided that Umberto would pay if Rashi could not. Since Umberto’s agreement is a surety contract, he was liable as soon as he cosigned the loan. Both a “suretyship and guaranty provide creditors with the right to seek payment from the third party if the primary debtor (or principal) defaults on her or his obligations” (Chapter 19 PowerPoint). Therefore, the difference between being a surety and a guarantor on a contract is that a surety has primary liability, and a guarantor has secondary liability. A surety contract is when “the creditor can demand payment from the surety from the moment the debt is due”
…show more content…
After Vulture sues Rashi, it can either freeze his bank account, issue a garnishment, or request a writ of execution. A frozen bank account is a sure sign that a creditor has obtained a court judgement against the defendant. Freezing a bank account is often associated with a garnishment, which is “an order that permits a creditor to collect a debt by seizing property of the debtor that is being held by a third party” (Chapter 19 PowerPoint). In this case, one of the types of property that can be garnished is the funds in Rashi’s bank account. Another option is to request a writ of execution, which is “an order that directs the sheriff to seize (levy) and sell any of the debtor’s nonexempt real or personal property” (Chapter 19 PowerPoint). If Vulture wins the judgement against Rashi and Rashi will not or cannot pay the amount due, Vulture can request a writ of execution. These are all legal remedies that could entitle Vulture to collect the full judgement amount, but a homestead exemption might also apply in this case that “ensures that the debtor will retain some form of shelter” (Chapter 19
Get Access