What protection does the homestead exemption provide for ...

[Lobcity]

What protection does the homestead exemption provide for homeowners who have mechanic's liens on their property?
 A) There is no protection; they are subject to the liens
 B) The homeowners can generally claim the exemption amount in that state to eliminate the liens from the property
 C) The lienors cannot foreclose on the home to satisfy the liens
 D) None of the above

Question 2

The creditors of Sara Delano have petitioned for involuntary bankruptcy proceedings against her. Delano has been consistently late in paying her obligations for the past year. Two months before the petition was filed, a custodian was appointed to protect Delano's property. In her statement contesting the bankruptcy petition, Delano pointed out that she had dealt in good faith and could not be shown to be guilty of any act of misconduct. In addition, she cited her willingness to allow a custodian to be appointed as an indication of her intention to avoid bankruptcy and honor her obligations. Can she prevail?

[Jody Vaughn]

Answer to Question 1

C

Answer to Question 2

No. The fact that Delano has generally not paid her debts as they came due is sufficient grounds for her creditors' action. In addition, the second grounds that would preclude her protest-the appointment of a custodian for her property-occurred within 120 days before the filing of the petition. The fact that Delano has exercised good faith has no bearing on the case.