Debtor and Creditor Relations, Part 6
Question 1: Describe what is meant by a reaffirmation agreement in a bankruptcy proceeding.
Answer 1: A reaffirmation agreement may be defined as an agreement by a debtor who has declared bankruptcy to continue paying on a debt, generally in order to hold possession of an asset that would be subject to repossession. For example, a person who has declared Chapter 7 bankruptcy signs a reaffirmation agreement on a vehicle loan in order to maintain possession of the vehicle. A reaffirmation agreement must be submitted in writing to the court, accompanied by an affidavit certifying that the agreement would impose no undue hardship on the debtor or a dependent of the debtor. Finally, a reaffirmation agreement requires the court’s approval.
There are lots of good resources about Creditor Relations that you can find available.
Question 2: Describe the nature of suretyship.
Answer 2: Suretyship may be defined as that situation which occurs when a person or a firm such as a bank or an insurance company (the creditor or surety) agrees to be primarily liable for another person’s (the debtor’s) debt, even if the creditor has not exhausted all remedies for collection. Usually, the party receiving the surety's performance will first try to collect or obtain performance from the debtor before trying to collect from the surety. A surety is deemed to be the primarily responsible party in the settling of the debtor’s debts. The role of a surety contrasts with that of a guarantor, a party with secondary responsibility in the settling of the debtor’s debts, and whose liability for the debtor’s debts occurs only after the lender fails to collect directly from the creditor.
Question 3: Enumerate the conditions under which a suretyship is discharged and becomes extinct.
Answer 3: A suretyship is discharged and becomes extinct under any of the following conditions:By the terms of the contract itself; a surety cannot be held liable for a longer period than that specified in the contract.By the acts to which both the creditor and debtor alone are parties; this may be done by such actions as (a) payment by the debtor; (b) release of the debtor; (c) compromise; and other similar actions.By acts of the surety and the creditorsBy fraud by the creditor in relation to the obligation of the surety or by the debtor with the knowledge or assent of the creditorBy operation of law, such as by confusion, by prescription, or by bankruptcyzza4zz
Previous: Debtor and Creditor Relations, Part 5 - Next: Definitions and Origins of Christianity, Part 1
|
