Exam 14: Secured Transactions and Bankruptcy

Under Chapter 7 of the Bankruptcy Code,creditor claims are divided into classes and the highest class must be satisfied in full before going to the next category.

Florence borrows $1,500 from Fremont,leaving her gold necklace with Fremont as collateral.Two weeks later,Florence borrows $1,000 from Corner Bank.Florence signs a security agreement and a financing statement giving Corner Bank a security interest in the same gold necklace.The financing statement is filed in the appropriate location.If Florence defaults on both loans,which creditor has the superior rights to the necklace?

Vicor,Inc.holds a patent on a drug.Vicor used the patent to secure a $1 million loan from First Bank.The patent is a general intangible.

In a Chapter 13 bankruptcy,creditors cannot force a debtor into bankruptcy;nor can they vote to confirm or reject a plan of reorganization.

Explain the difference between attachment and perfection.

Great State Bank and First Federal Bank have a security interest in TriColor's equipment.If neither secured party is perfected,the first interest to attach has priority over the collateral.

First Federal loaned Madeline $20,000 to purchase a new van.The van was for Madeline's personal and family use.First Federal's security interest is a purchase money security interest which perfects automatically.

Bagsby owns a business selling insects for organic gardening.Bagsby is considering a loan agreement with First Natural Bank.The loan officer is asking that the loan be secured by Bagsby's inventory of insects,now owned or hereafter acquired.Each time Bagsby gets new insects or sells his insects,a new security agreement will need to be signed.

Eva has student loans guaranteed by the government amounting to $32,000 that came due two years ago,after she graduated from college.She has found a great job in her chosen profession,but she decides that she could enjoy her salary much more if she had her loans discharged through bankruptcy.Although preserving as much of the debtor's property as possible is one of the primary goals of bankruptcy,Eva cannot discharge all of her debts,including her student loans,and start over.

Under Revised Article 9 of the UCC,electronic chattel paper may not be used as collateral in a secured transaction.

Kathleen filed for voluntary bankruptcy and the automatic stay went into effect.The automatic stay:

In 2005 Congress included provisions in the Bankruptcy Code to speed up the process under:

Artistic Framing,a business with $120,000 of unsecured debt,needs to file for bankruptcy,but wants to continue in business.Discuss what chapter of the Bankruptcy Code should be used,and discuss the effect of a 2005 change to the Bankruptcy Code on the proceedings.

Which of the following is a primary goal of bankruptcy:

Gateway sold a big-screen TV and entertainment center to Inez for $2400 on credit.Inez signed a promissory note and gave Gateway a security interest in the TV and entertainment center.Gateway filed a financing statement in the appropriate public office.When Inez defaulted on her monthly payments owing a balance of $2080,Gateway's attorney made arrangements to have the TV and entertainment center repossessed.The attorney then placed classified ads in the local newspaper to sell the goods.The attorney's fees are $400,the repo company charged $150,and the advertising costs are $50.If Inez does not redeem,and the TV and entertainment center are sold for $1850,how will the money be disbursed?

First Bank loaned $400,000 to Thomas,taking a security interest in his yacht.Thomas defaulted on the loan and First Bank repossessed the boat.First Bank sold the yacht at a public sale.The sale yielded $50,000 more than the debt.First Bank:

Great State Bank loans money to Seth,securing the loan with property owned by Seth.Great State Bank is advised by its attorney to file a financing statement.Great State Bank doesn't understand why it should spend the extra money for this filing,since Seth has told them that he has no other creditors.Why should Great State Bank file a financing statement?

Once a default occurs in a secured transaction,the secured party must obtain a court order before taking possession of the collateral.

Iris received a discharge under a Chapter 7 bankruptcy.She cannot receive another discharge under Chapter 7:

Justin filed a Chapter 7 bankruptcy petition in which he exempted his home,valued at $123,000.Justin can keep his entire home from all creditors if: