Secured Transactions 2 of 2 (46)

Question 1

Perfection

Answer 1

A process (which cannot be effective before attachment) that can occur in any of the following 3 ways (FAT):

• Filing of a financing statement,
• Automatic perfection of a PMSI, or
• Taking possession of the collateral, any of which gives a creditor legally enforceable rights to collateral against the debtor and others with security interests in the collateral, who do not have a perfected interest or who perfected their security interest later.

Question 2

Financing Statement

Answer 2

A document filed with an appropriate public office that describes the collateral, gives the name and address of the creditor, and has the signature and address of the debtor, essentially giving notice to all parties of the security interest of the creditor that is filing the financing statement, and giving that claim priority over all other claims that are not perfected or are perfected later, with the possible exception of a PMSI.

Question 3

Automatic Perfection of a PMSI

Answer 3

A PMSI in consumer goods, which is automatically perfected against attachment, having higher priority than all other claims, perfected or not, except a good-faith consumer purchaser of the property; and a higher priority than all claims for property other than inventory, including a good-faith consumer purchaser of the property, if a financing statement is filed within 20 days of attachment.