Mod 29 Secured Transactions

Question 1

Chattels

Answer 1

Personal property

Question 2

Purchase Money Security Interest (PMSI) Creditor 2

Answer 2

1 creditor who advances money or credit to enable a debtor to
Obtain collateral and

2 takes security interest in collateral

Question 3

After Acquired Property Clause

2) it is used most often with…

Answer 3

Creditor takes as collateral property to be acquired by debtor at
Later date

2) used most often with inventory and equipment

Question 4

Attachment is…

Answer 4

Creditor’s rights vs. the debtor only

Question 5

3 elements of Attachment

Answer 5

1 agreement
2 value by creditor
3 debtor must have rights

Question 6

Attachment elements:

Agreement

Answer 6

Must have agreement between creditor and debtor (oral or written)

Question 7

Attachment elements:

Must have an agreement between the creditor and debtor 2

Answer 7

1 written agreement need only be signed by debtor

2 can be oral only if creditor takes possession with debtor’s
agreement (pledge)

Question 8

Attachment elements:

Value

Answer 8

Must have value given by creditor

Question 9

Attachment elements:

Debtor must have…

Answer 9

Debtor must have rights in collateral

Question 10

There is no attachment until…

Answer 10

All 3 elements have occurred

Question 11

Perfection is…

Answer 11

Creditor’s rights vs. subsequent 3rd parties

Question 12

Creditor is unperfected

Answer 12

Creditor is unprotected

Question 13

Perfection by creditor

Answer 13

Taking possession of collateral with debtor’s agreement

Question 14

Perfection by Creditor taking Possession of the collateral with debtor’s agreement

Answer 14

Only way to perfect with negotiable instruments or stocks and
Bonds

Question 15

Perfection by Filing a Financing Statement:

Gives…

Answer 15

Constructive notice to all 3rd parties of the security interest

Question 16

Perfection by Filing a Financing Statement:

Must contain…3

Answer 16

1 names and addresses of parties

2 general description of collateral

3 signature of debtor

Question 17

Perfection by Filing a Financing Statement:

Filing is the only way to…

Answer 17

Perfect accounts receivable

Question 18

Perfection by attachment is…

Answer 18

An automatic but very limited type of perfection

Question 19

Perfection by Attachment:

Can only occur with…

Answer 19

PMSI Creditors in consumer goods

Question 20

Perfection by Attachment:

One who perfects by attachment beats…

Answer 20

All other creditors

Question 21

Perfection by Attachment:

One who perfects by attachment loses…

Answer 21

Loses collateral to any consumer purchaser from debtor without
Notice of security interest

Question 22

One who perfects by attachment loses collateral to any consumer purchaser from debtor without notice of security interest. How can you protect against this?

Answer 22

Can protect against this by filing

Question 23

Usually a perfected creditor beats…

Answer 23

A purchaser from debtor

Question 24

2 exceptions when perfected creditor loses to a purchaser from debtor

Answer 24

1 one who perfects by attachment loses to purchaser without notice

2 one who buys from a merchant in ordinary course of business
Takes free of all security interests

Question 25

one who buys from a merchant in ordinary course of business | Takes free of all security interests even...

Answer 25

If they had notice of the security interest

Question 26

Priority with multiple creditors: Usually the first creditor to...

Answer 26

File or perfect wins (1st in time is 1st in line)

Question 27

Usually the first creditor to file or perfect wins: 2 exceptions

Answer 27

1 PMSI Creditor in noninventory collateral 2 PMSI creditor in inventory collateral

Question 28

Usually the first creditor to file or perfect wins: exception Purchase Money Security Interest (PMSI) Creditor in non inventory collateral...

Answer 28

Has priority if they file within 20 days of debtor getting possession

Question 29

Usually the first creditor to file or perfect wins: exception Purchase Money Security Interest (PMSI) Creditor in inventory collateral...

Answer 29

Has priority if before Debtor gets possession they file and give Written notice to creditors ahead of him

Question 30

Collateral perfected in one state and moved to another state...

Answer 30

Remains perfected 4 months after arrival in new state

Question 31

3 remedies of creditor after default

Answer 31

1 repossess 2 strict foreclosure 3 sue debtor

Question 32

3 remedies of creditor after default: Repossess

Answer 32

Peacefully repossess the collateral and sell or lease it

Question 33

Peacefully Repossess the collateral and sell or lease it: Can be sold at...2

Answer 33

1 public sale and 2 creditor can bid

Question 34

Peacefully Repossess the collateral and sell or lease it: Can also be sold at...2

Answer 34

1 sold at private sale and 2 creditor usually cannot bid

Question 35

Peacefully Repossess the collateral and sell or lease it: After sale debtor is...2

Answer 35

1 liable for any deficiency and 2 entitled to any surplus

Question 36

Secured Transaction

Answer 36

Debt secured by personal property

Question 37

Peacefully Repossess the collateral and sell or lease it: A good faith purchaser for value at public sale...2

Answer 37

Takes free of that interest and all subordinate liens

Question 38

Peacefully Repossess the collateral and sell or lease it: Debtor can redeem the property by...

Answer 38

Paying all secured creditors in full

Question 39

Strict foreclosure define

Answer 39

Creditor keeps collateral but must cancel entire debt

Question 40

Strict foreclosure: If debtor or other creditors object...

Answer 40

Within 21 days creditor must sell

Question 41

Strict foreclosure: If debtor has paid 60% or more of price of consumer goods...

Answer 41

Creditor must sell unless debtor waives the right

Question 42

Remedies for creditor after default: Sue debtor for debt and...

Answer 42

Reduce claim to a judgment

Question 43

Sue debtor for debt and reduce claim to judgement

Answer 43

Often used if collateral is insufficient to pay debt (called a deficiency judgment)

Question 44

Attachment define

Answer 44

Creates the secured transaction

Question 45

Security agreement

Answer 45

Written agreement (of attachment)

Question 46

Perfection define

Answer 46

Creditor gives notice to all other creditors that he has first rights To the collateral