Exam 24: Secured Transactions

At her neighbor's garage sale, Constance buys a vanity dressing table from her neighbor, Carlos, for $160. Constance purchased the vanity table for her own personal use, without any knowledge that Carlos had signed a security agreement giving All Purpose Furniture, Inc. a security interest in the vanity table. All Purpose Furniture did not file a financing statement. Constance does not know that Carlos is still paying off the purchase money security interest and owes All Purpose Furniture, Inc. $400. Under these circumstances

Gateway sold a big-screen TV and entertainment center to Iris for $2,000 on credit. Iris 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 Iris defaulted on her monthly payments owing a balance of $1,780, 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 $300, the repo company charged $150, and the advertising costs are $50. (A)If Iris chooses to redeem the property, how much must she pay to Gateway to recover the property? (B)If Iris does not redeem and the TV and entertainment center are sold for $1,750, how will the money be disbursed?

In terms of collateral, which of the following would be categorized as "equipment"?

Spicy & Hot, Inc. is interested in expanding its Mexican food restaurant into a Mexican food catering business. Spicy & Hot, Inc. buys a new delivery van from Van World. Spicy & Hot, Inc. is a buyer in the ordinary course of business when purchasing the van.

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

Fowler Bros. has applied to Gibralter Bank for a $50,000 loan for its business expansion. If Fowler Bros. plans to use its account at Gibralter Bank as collateral, discuss what the bank needs to do for a security interest to attach.

Which of the following parties can defeat a perfected security interest?

Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security interest in the machine. Yoro Chickens defaulted on the loan. Wedney repossessed the machine. Wedney would like to retain the machine to use as a model. Which of the following statements is correct?

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?

For a security interest to attach, there must be an agreement.

Donna defaulted on her loan owed to Second State Savings and Loan. The loan was secured with Donna's car. Donna used the car for personal and family reasons. Which statement is correct?

Which of the following is correct concerning termination statements?

The property subject to a security interest is called

Maddie enters into a secured consumer debt transaction with Friendly Bank. When Maddie pays the loan in full, Friendly Bank is required to file a statement indicating that it no longer claims a secured interest in the collateral. This statement must be filed within one month from the date the debt is fully paid.

Florence borrows $1,500 from Fremont, leaving her gold necklace with Fremont as collateral. Two weeks earlier, Florence had borrowed $1,000 from Corner Bank. Florence signed 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?

Article 9 applies to any transaction intended to create a security interest in personal property or fixtures.

Morefield Custom Design sends 30 recliners by rail to Danville Furniture. To show where the goods will be shipped and who gets them when they arrive, Morefield will obtain ____, which can be used as collateral in a secured transaction.

If repossessed collateral is sold or otherwise disposed of by the creditor, then the time, place, manner, and method of disposal must be

A security interest in money may be perfected by

Country Bank, located in Indiana, loaned Chmelik $5,000 and obtained a security interest in a copyright Chmelik owns. Chmelik lives in Illinois, but works in Indiana. In order to perfect its interest, Country Bank files a financing statement in Indiana. The financing statement provides Chmelik's correct name, his business address, and a reasonable description of the copyright used as collateral. Is the financing statement sufficient?