Classifications of Collateral

Question 1

general types of collateral (can only be one at a time)

Answer 1

• goods
• semi-tangible and intangible collateral
• proceeds

*Classify the collateral from the debtor’s perspective

Question 2

*consumer goods

Answer 2

Goods bought or used for personal, family, or household purposes

Question 3

*Inventory

Answer 3

Goods held for sale or lease and goods consumed by business

ex: fuel used to run a factory

Question 4

*Farm products

Answer 4

goods used or produced in farming that are in the possession of or used by a farmer

Question 5

*Equipment

Answer 5

Default category

goods that are not consumer goods, inventory, or farm products

Question 6

Instruments

Answer 6

notes, drafts, and negotiable certificates of deposit

Question 7

Classifying collateral rules

Answer 7

look from debtor’s perspective

• if multiple uses, look to predominant use

Question 8

Documents

Answer 8

Bills of lading and warehouse receipts- may be represented by a tangible writing or be in electronic format

Question 9

Chattel paper

Answer 9

records evidencing both a monetary obligation and a security interest in or leased goods, such as a promissory note and written security agreement

Question 10

Accounts

Answer 10

Right to payment for goods, services, such as accounts receivable

Question 11

Deposit Accounts

Answer 11

savings accounts, passbook accounts, nonnegotiable certificates of deposit

Note: article 9 only applies to non consumer deposit accounts and consumer deposit accounts that are claimed as proceeds of other collateral

Question 12

Investment property

Answer 12

Stock, bonds, mutual funds, commodity accounts, brokerage accounts

Question 13

Commercial tort claims

Answer 13

tort claims filed by organizations and tort claims filed by individuals that arose out of the individuals’ business and do not involve personal injury

Note: article 9 only applies to commercial tort claims and noncommercial tort claims that are claimed as proceeds of other collateral

Question 14

General intangibles

Answer 14

Intangibles not fitting the definitions of other types of intangibles, such as copyrights and goodwill

Question 15

Payment intangible

Answer 15

a general intangible in which the principal obligation of one of the parties it the payment of money

Question 16

*Proceeds

Answer 16

include whatever is received upon sale, exchange, collection or other disposition of collateral or proceeds

Claims arising out of the loss of, defects in, or damage to collateral also are proceeds

Question 17

Insurance payable

Answer 17

by reason of loss or damage to collateral is a proceed, unless it is payable to someone other than the debtor or the secured party