Terminology

Question 1

debtor

Answer 1

person who owes payment or performance of the obligation secured

Question 2

secured party/creditor

Answer 2

lender, seller or other person in whose favor there is a security interest (person has a lien)

Question 3

security agreement

Answer 3

agreement b/w debtor and secured party that CREATES the security interest

Question 4

security interest

Answer 4

interest in personal property or fixtures which SECURES PAYMENT or performance of an obligation

it is a CONTINGENT property interest in the debtor’s collateral that the debtor grants to the creditor

when the contingency, which is DEFAULT, occurs, the property interest springs to life and the creditor has rights in the debtor’s collateral

Question 5

collateral

Answer 5

the property SUBJECT to the security interest

property that the secured party can repossess upon default to insure that the debt is paid

Question 6

Purchase money security interest (2 kinds)

Answer 6

SELLER financed PMSI

FINANCER financed PMSI

Question 7

SELLER financed PMSI

Answer 7

secured party sells debtor collateral on CREDIT and retains a security interest in the item sold

Question 8

FINANCER financed PMSI

Answer 8

an enabling loan;

1) a loan to the debtor that enables the debtor to buy specific collateral,
2) and the creditor takes a security interest in the specific collateral
3) credit or loan proceeds must ACTUALLY be used to acquire the collateral (if not, creditor still has security interest in collateral but not a PMSI)

Question 9

Attachment

Answer 9

deals with the steps legally required to give the secured party a security interest in the collateral that is effective AS AGAINST THE DEBTOR

once a security interest attaches, it is effective against the debtor and the creditor has all of the rights of a secured creditor under article 9.

A CREDITOR IS NOT SECURED UNTIL ATTACHMENT!

Question 10

Perfection

Answer 10

deals with those steps legally required to give the secured party an interest in the collateral that is effective AS AGAINST THE WORLD (other creditors).

in general, perfection is the process of giving PUBLIC NOTICE of the security interest to the world

Question 11

Financing statement

Answer 11

document generally used to provide PUBLIC NOTICE of the security interest, and so to PERFECT the security interest