Secured

Question 1

I loan you money, how do I protect myself?

Answer 1

I take an asset as collateral to secure my transaction

Question 2

UCC article 9?

Answer 2

Governs secures transaction. Creditor loans money to the debtor in exchange for secured interest in your property

Question 3

Types of collateral?

Answer 3

Inventory
Equipment
Consumer Goods

Question 4

Inventory (Secured)?

Answer 4

Something that is inventory in the hands of the seller

EX: A computer that a store would sell

Question 5

Equipment? (Secured)

Answer 5

Something that the company uses in their business

EX: COmputer they use for business, treadmill at a gym

Question 6

Consumer goods? (Secured)

Answer 6

Things people use for their own personal use

EX: Computer I use at home for fun

Question 7

Who is the lender trying to protect themselves from? >

Answer 7

DOTS

Debtor
Other creditors
trustees
Secusequent purchasers

Question 8

how do creditors protect themselves?

Answer 8

1. To get it back from debtor they need Attachment
2. To get back from other third parties (OTS) need to attach AND perfect

Question 9

What is a PMSI?

Answer 9

1. Purchase money secured entered
   1. Purchaser gave you the money to buy the assets that became the collateral
2. Has extra special rights
   1. When there is a PMSI, the debtor will have special rights over all third parties

Question 10

What is attachment?

Answer 10

Once we have all three of these things (PIG), we have attachment:

1. Property owned by debtor
2. Interest is created
   
   1. Take possession of the goods
   2. Signed security agreement
      1. Includes description of the agreement
      AND has am agreement of the collateral
3. Give value to the debtor
   1. Line of credit is valid value

EXTRA:

1. attachment can also attach to the proceeds
2. Can also attach to after acquired property

Question 11

what is perfection?

Answer 11

Perfection provides notice.

  1. have to do one of the following: 
            1. File a financing statement 
                1. Describes debt, collateral, is signed 
                2. Lasts for five years, have to renew 5 years within 6 months 

            2. Automatic perfection 
                1. PMSI in consumer goods 
                    1. You will automatically perfect without having to file 
                    2. LOOPHOLE
                        1. IF sold from consumer to consumer, second consumer gets it free of secured interest UNLESS you file within 20 days of attachment

            3. Take possession 
                1. Pawnshop example

Question 12

When must you re-perfect?

Answer 12

When property is taken to a new state

Question 13

Inventory rule?

Answer 13

1. If you’re buying the item, and it is inventory in the hands of the seller you get it free of any prior interest
   1. Doesn’t matter what it is to the buyer
2. Even if you new the prior claim existed, you get it free of claim

Question 14

Priority among two creditors who have a secrety interest in the same collateral

Answer 14

1. First to file or perfect
2. If no party perfects, the first to attach has superiority. Know that a perfected security interest beats an unperfected one—even if one has an unperfected PMSI. This has been tested multiple times!

Question 15

Right of redemption for secured?

Answer 15

Debtor has the right of redemption