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36 Cards in this Set

  • Front
  • Back
What 5 things could be collateral for a secured transaction?
1. Consumer goods

2. Equipment (items used in business - cash registers)

3. Inventory

4. Farm Products

5. Fixtures
Define attachment.
It means that the security interest is enforceable.
What are the elements of valid attachment? VCR
1. Value must be given by creditor

2. There must be a contract or record

3. Rights in the collateral
What are the elements of a valid contract/record of attachment and what is the agreement called?
Called the security agreement and ...

1. Must evidence the secured transaction unless the secured party has taken possession of the collateral

2. Must be signed by debtor (acknowledge)

3. Must reasonably ID the collateral
The debtor must have _______ in the collateral.
What is an after-acquired collateral clause and is it enforceable?
1. It is an interest in collateral that the debtor will acquire later.

2. they are enforceable
Define "perfection of security interests"
1. It is a publicity device that the secured party uses to put the world on notice of the secured party's existence.

2. Protects against other creditors
How does a secured party perfect?
1. By secured party taking possession of collateral

2. Automatic perfection or purchase money security interests

3. Filing notice of the security interests in the public records
What is a purchase money security interest and what is special about it?
1. The secured party takes a security interest in the very object it enables the debtor to buy by lending the money.

2. It perfects automatically and is given special treatment under the UCC
What is the most common route to perfection?
Filing notice of the security interest in the public records
What is filed when a secured party seeks to perfect by filing notice?
UCC - Financing statement

1. Debtor's name and address

2. Creditor's name and address

3. Description of the collateral (general OK)
Where is a UCC-1 financing statement filed?
Centrally with the secretary of state where the debtor is located

1. Individual - place of principal residence

2. Org - state where organized
What are the exceptions to the rule that a UCC-1 financing statement should be filed locally?
If the collateral is ...

1. Minerals

2. Timber

3. Fixtures
What are the 6 classes of creditors?

LAP dance then BNG
1. Lien Creditor

2. Attached un-perfected creditor

3. Perfected Attached Creditor

4. Buyer in ordinary course

5. Non-ordinary course buyer

6. General unsecured creditor
Who is an lien creditor
General unsecured creditor who goes to court to get a lien on the collateral
Who is an attached unperfected creditor
Article 9 creditor who creates an enforceable security interest but either fails to perfect or messed it up.
Who is an attached perfected attached creditor
Article 9 creditor who succeeds in attaining perfection
Who is a buyer in ordinary course?
Someone who purchases the merchandise from a creditor's inventory.
Who is a non-ordinary buyer in due course?
A person who buys the collateral outside the ordinary stream of commerce.
Who is a general unsecured creditor?
Lender who did not take collateral
Who will an Attached Unperfected creditor prevail against?
Win - debtor, GUC, later AUP

Lose - PAC, LC, any other buyer with notice
Who will the Perfected Attached Creditor win against?
Everyone except


2. PAC who filed first

3. Certain PMSI holders
Who wins in a contest between two Perfected Attached Creditors?
First in time
Who wins in a contest between an After Acquired Collateral Financier and a Perfected Attached creditor?
1. Collateral is inventory - PMSI if filed and notified b4 debtor takes possession and

2. Collateral is equipment - PMSI if files w/in 20 days of debtor taking possession
Who wins in a contest between buyer in ordinary course and perfected attached creditor?
Buyer in ordinary course
What is the general rule for creditors resorting to self-help repossession?
They can do it so long as they don't breach the peace?

Repossession over even mild debtor objection is a breach of the peace
Can a creditor repossess when the collateral is inside the home of the debtor?
Yes, but can only enter the home with voluntary and contemporaneous consent.
Can a creditor repossess when the collateral outside the house?
Yes, as long as there is no debtor objection.
How can a creditor achieve repossession by judicial action?
1. Get a writ of replevin

2. Sheriff goes and repossesses
What occurs under strict foreclosure?
Creditor retains the collateral in full satisfaction of the debt thus canceling the debt.
When is strict foreclosure not allowed?
If 60 percent of the debt is paid.
One of the options open to a creditor when a debtor defaults is to _________ the collateral at a _________ or ________ auction.
1. sell

2. public

3. Private
If the sale of collateral at an auction does not satisfy the debt, the creditor may _________.
Bring a deficiency judgment against the debtor.
When is a debtor's right to redeem cut off?
When the debtor has sold the property or completed a strict foreclosure.
Generally what must the debtor pay off to redeem?
1. Amount owed

2. Missed payments

3. Interest

4. Creditor's attorney's fees
What must the debtor pay off under an acceleration clause to redeem?
Entire debt plus interest.