Types of Collateral

Question 1

Generally, what is collateral?

Answer 1

Collateral refers to the property in which a security interest is created, and it extends to identifiable proceeds from the property that serves as collateral.

Question 2

What are the 4 types of collateral?

Answer 2

1. Goods
2. Consumer Goods
3. Inventory
4. Accounts

Question 3

What are goods?

Answer 3

Goods are all things that are moveable when a security interest attaches.

Question 4

What are consumer goods?

Answer 4

Consumer goods are goods that are used mainly for personal, family or household purposes.

Question 5

What is inventory?

Answer 5

Inventory includes goods that are kept by a person for sale or lease. (does not include goods held for repair).

Question 6

What are accounts?

Answer 6

A security interest in a debtor’s “accounts” covers any right to payment of a monetary obligation, whether or not earned by performance, for property that has been or is to be sold. (i.e., accounts receivable).

Question 7

As it pertains to accounts, can a secured party collect directly from the person that owes the debtor?

Answer 7

Yes.
A secured party can collect directly from the person who owes the debtors if the debtor defaults.