7.6 - Secured Transaction

Question 1

A limited right in specific personal property of he debtor that allows the creditor to take the property (commonly referred to as repossessing) if the debtor fails to fulfill the creditor obligation:

Answer 1

Security interest

Question 2

Applies to most contractual security interest in personal property or fixtures and outright sales of accounts receivable.

Answer 2

Article 9 of the Uniform Commercial Code (UCC)

Question 3

Article 9 does not apply to:

Answer 3

Security interest in land, wage claims, and statutory liens such as mechanics liens.

Question 4

A type of security interest that has priority over all other types of security interests in the same collateral if it is properly perfected:

Answer 4

Purchase Mooney security interest (PMSI)

Question 5

A PMSI arises when:

Answer 5

A creditor sells the collateral to the debtor on credit, retaining a security interest for the purchase price
OR
The creditor advances funds used by the debtor to purchase the collateral

Question 6

The property subject to a security interest:

Answer 6

Collateral

Question 7

What are the 4 broad categories of collateral?

Answer 7

Goods
Intangibles & semi-intangibles
Investment property
Proceeds

Question 8

The goods category of collateral include:

Answer 8

Consumer goods
Inventory
Equipment

Question 9

The intangible collateral account includes:

Answer 9

Any right to payment for goods, services, real property, or use of a Reddit card not evidenced by an instrument or chattel paper

Question 10

The investment property category of collateral includes:

Answer 10

Stocks
Bonds
Mutual funds

Question 11

The proceeds category of collateral includes:

Answer 11

Whatever is received upon the sale, exchange, collection or other disposition

Question 12

Established the right of a creditor in collateral vis-a-vis the debtor:

Answer 12

Attachment

Question 13

To acquire the maximum priority in the collateral over other parties who may have an interest in the collateral, the secured party must:

Answer 13

Perfect

Question 14

The five methods of perfection include:

Answer 14

1. Filing
2. Taking possession of the collateral
3. Control
4. Automatic perfection
5. Temporary perfection

Question 15

Under the method of perfection by filing, what documents are required?

Answer 15

Filing of a financing statement that give the names and addresses of the debtor and creditor and an indication of the type of collateral covered by the financing statement

Question 16

The method of perfection by taking possession is available for what type of collateral and what’s an example of this?

Answer 16

For tangible only
Similar to when a pawn shop takes an item in exchange for a loan of money

Question 17

Under the method of automatic perfection, a security interest can be perfected simply by:

Answer 17

The attachment of the security interest th out any added requirements

Question 18

The only type of PMSI that is automatically perfected is:

Answer 18

A PMSI in consumer goods

Question 19

Are small-scale assignment of accounts (such as a few accounts receivable) automatically perfected?

Answer 19

Yes

Question 20

If a creditor has a perfected security interest in collateral an that collateral is sold, the creditor has:

Answer 20

Temporary perfected security interest in the proceeds of the collateral sold

Question 21

How long does temporary perfection last?

Answer 21

20 days

Question 22

If a debtor moves from one state to another, perfection in the first state is valid for:

Answer 22

4 months

Question 23

What is the most important and most used of the rights on default?

Answer 23

To take possession of and sell the collateral on default

Question 24

A judicial action seeking the transfer of personal property:

Answer 24

Replevy action

Question 25

Proceeds of a default sale are distributed in the following order:

Answer 25

1. Pay the expenses of repossession and sale
2. Pay creditors with a security interest in the collateral in order of priority
3. Any surplus is pad to the debtor

Question 26

If sale of the collateral does not bring in enough money to pay the expenses of the sale and the debt, the secured party may:

Answer 26

Bring a court action to recover the deficiency from the debtor

Question 27

In consumer goods cases in which the debtor has paid at least 60% of the loan, the secured party must:

Answer 27

Sell the collateral within 90 days after repossession