Question 1

Change of possession of commercial collateral from the debtor to the creditor/secured party perfects the security interest.

Accepted Answer

A) True 
 B)False

Question 2

Identify the statement that is true of perfection of attachment of consumer goods.

Accepted Answer

A) If the secured party filed a financing statement for the collateral,the new buyer takes the collateral free of any security interest. 
B) If the goods are to become fixtures,the creditor can get full protection through perfection by attachment. 
C) If the new buyer buys from the debtor without knowledge of the interest,for value and for personal use,the new buyer takes free of the security interest. 
D) If the consumer goods are motor vehicles for which the state issues certificates of title,perfection by attachment is effective. 
A) If the secured party filed a financing statement for the collateral,the new buyer takes the collateral free of any security interest. 
B) If the goods are to become fixtures,the creditor can get full protection through perfection by attachment. 
C) If the new buyer buys from the debtor without knowledge of the interest,for value and for personal use,the new buyer takes free of the security interest. 
D) If the consumer goods are motor vehicles for which the state issues certificates of title,perfection by attachment is effective.

Question 3

Explain a creditor's three potential courses of action upon default.

Accepted Answer

If the debtor defaults,the secured credi

Question 4

Nick bought a diamond ring on credit from Rike as an engagement present for his fiancée.He signed a purchase money security agreement giving Rike a security interest in the ring until it was paid for.Rike did not file a financing statement covering its security interest.Nick filed for bankruptcy.The bankruptcy trustee claimed that the diamond ring was part of the bankruptcy estate because Rike did not perfect his security interest.Rike claimed that it had a perfected security interest in the ring.Did Rike have to file a financing statement to perfect its security interest in the diamond ring?

Accepted Answer

No.Rike had a perfected security interes

Question 5

Explain how a security interest is created.

Accepted Answer

The creation of a security interest is a

Question 6

A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory if :

Accepted Answer

A) the purchase money security interest is perfected three months after the debtor receives possession of the inventory. 
B) the purchase money secured party gives an oral notification to the prior secured creditor before the debtor receives the inventory. 
C) the holder of the competing security interest received notification within eight years before the debtor receives the inventory. 
D) the notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory. 
A) the purchase money security interest is perfected three months after the debtor receives possession of the inventory. 
B) the purchase money secured party gives an oral notification to the prior secured creditor before the debtor receives the inventory. 
C) the holder of the competing security interest received notification within eight years before the debtor receives the inventory. 
D) the notification states that the person expects to acquire a purchase money security interest in inventory of the debtor and describes the inventory.

Question 7

A creditor can perfect a security interest by filing a public notice it.

Accepted Answer

A) True 
 B)False

Question 8

An interest in personal property that a creditor obtains to secure payment of an obligation is a security interest.

Accepted Answer

A) True 
 B)False

Question 9

An appliance store sells a television set to Adam for $750 on a conditional sales contract,reserving a security interest in the set until Adam has paid for it.The store does not file a financing statement but relies on attachment for perfection.Adam later borrows money from a credit union and gives it a security interest in the television set.Adam defaults on his loans and the credit union tries to claim the set.Under these circumstances:

Accepted Answer

A) the credit union has a better claim to the set than does the appliance store. 
B) the appliance cannot claim the set as they relied on attachment for perfection. 
C) the appliance store has a better claim to the set than does the credit union. 
D) neither the appliance store nor the credit union can claim the set. 
A) the credit union has a better claim to the set than does the appliance store. 
B) the appliance cannot claim the set as they relied on attachment for perfection. 
C) the appliance store has a better claim to the set than does the credit union. 
D) neither the appliance store nor the credit union can claim the set.

Question 10

Under the UCC,a fixture is defined as:

Accepted Answer

A) goods bought primarily for business,personal,or household use. 
B) goods held for sale or lease to be used under contracts of service. 
C) goods that are so affixed to real property that they are considered a part of the real property. 
D) goods other than inventory,farm products,or consumer goods. 
A) goods bought primarily for business,personal,or household use. 
B) goods held for sale or lease to be used under contracts of service. 
C) goods that are so affixed to real property that they are considered a part of the real property. 
D) goods other than inventory,farm products,or consumer goods.

Question 11

A continuation statement:

Accepted Answer

A) can be filed a month before the expiration date. 
B) can be filed within five months before the expiration date. 
C) can be filed within three months before the expiration date. 
D) can be filed within six months before the expiration date. 
A) can be filed a month before the expiration date. 
B) can be filed within five months before the expiration date. 
C) can be filed within three months before the expiration date. 
D) can be filed within six months before the expiration date.

Question 12

Which of the following statements is true of sale of collateral?

Accepted Answer

A) In disposing of the collateral,the creditor must use a commercially reasonable method to produce the greatest benefit for himself. 
B) The creditor must sell the collateral unless the consumer orally objects to the sale,otherwise,the creditor may keep the collateral in satisfaction of the debt. 
C) If less than 80% of the purchase price has been paid,the creditor may propose to the debtor that the creditor keep the collateral in satisfaction of the debt. 
D) If the creditor has a security interest in consumer goods and the debtor has paid 60% or more of the purchase price,the creditor must sell the repossessed collateral. 
A) In disposing of the collateral,the creditor must use a commercially reasonable method to produce the greatest benefit for himself. 
B) The creditor must sell the collateral unless the consumer orally objects to the sale,otherwise,the creditor may keep the collateral in satisfaction of the debt. 
C) If less than 80% of the purchase price has been paid,the creditor may propose to the debtor that the creditor keep the collateral in satisfaction of the debt. 
D) If the creditor has a security interest in consumer goods and the debtor has paid 60% or more of the purchase price,the creditor must sell the repossessed collateral.

Question 13

When a consumer debtor completely fulfills all debts and obligations secured by a financing statement,he/she is entitled to a:

Accepted Answer

A) continuation statement. 
B) termination statement. 
C) statement of benefits. 
D) statement of claims and defenses. 
A) continuation statement. 
B) termination statement. 
C) statement of benefits. 
D) statement of claims and defenses.

Question 14

An artisan's lien:

Accepted Answer

A) is ineffective against other creditors unless a proper financing statement has been filed. 
B) may be given priority even over perfected security interests in collateral if the artisan has possession of the goods. 
C) is invalid if the artisan did not inform the debtor,before beginning the work,that he intended to claim a lien. 
D) gives a retailer prevalence over someone who buys the collateral from the debtor if the buyer gives value for goods. 
A) is ineffective against other creditors unless a proper financing statement has been filed. 
B) may be given priority even over perfected security interests in collateral if the artisan has possession of the goods. 
C) is invalid if the artisan did not inform the debtor,before beginning the work,that he intended to claim a lien. 
D) gives a retailer prevalence over someone who buys the collateral from the debtor if the buyer gives value for goods.

Question 15

Define future advances and explain how covering future advances in the security agreement benefits the creditor.

Accepted Answer

A security agreement may cover extension

Question 16

The agreement between the creditor and the debtor may authorize the creditor to repossess the collateral in case of default.

Accepted Answer

A) True 
 B)False

Question 17

A security interest is not legally enforceable against a debtor until it is attached to a particular item or items of the debtor's property

Accepted Answer

A) True 
 B)False

Question 18

The law covering security interests in personal property is contained in:

Accepted Answer

A) Article 6 of the Uniform Commercial Code. 
B) Article 4 of the Uniform Commercial Code. 
C) Article 3 of the Uniform Commercial Code. 
D) Article 9 of the Uniform Commercial Code. 
A) Article 6 of the Uniform Commercial Code. 
B) Article 4 of the Uniform Commercial Code. 
C) Article 3 of the Uniform Commercial Code. 
D) Article 9 of the Uniform Commercial Code.

Question 19

Explain the meaning of a purchase money security interest in consumer goods with an example.

Accepted Answer

A creditor who sells goods to a consumer

Question 20

Change of possession is:

Accepted Answer

A) the most common way of perfecting a security interest. 
B) the only way to perfect a security interest in money. 
C) the most convenient way of perfecting a security interest in consumer goods. 
D) not a practical method of perfecting security interests in commercial collateral. 
A) the most common way of perfecting a security interest. 
B) the only way to perfect a security interest in money. 
C) the most convenient way of perfecting a security interest in consumer goods. 
D) not a practical method of perfecting security interests in commercial collateral.

Exam 43: Security Interests in Personal Property

Change of possession of commercial collateral from the debtor to the creditor/secured party perfects the security interest.

Identify the statement that is true of perfection of attachment of consumer goods.

Explain a creditor's three potential courses of action upon default.

Explain how a security interest is created.

A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory if :

A creditor can perfect a security interest by filing a public notice it.

An interest in personal property that a creditor obtains to secure payment of an obligation is a security interest.

Under the UCC,a fixture is defined as:

A continuation statement:

Which of the following statements is true of sale of collateral?

When a consumer debtor completely fulfills all debts and obligations secured by a financing statement,he/she is entitled to a:

An artisan's lien:

Define future advances and explain how covering future advances in the security agreement benefits the creditor.

The agreement between the creditor and the debtor may authorize the creditor to repossess the collateral in case of default.

A security interest is not legally enforceable against a debtor until it is attached to a particular item or items of the debtor's property

The law covering security interests in personal property is contained in:

Explain the meaning of a purchase money security interest in consumer goods with an example.

Change of possession is:

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