Deck 58: Loan Security and Repossession in Credit Transactions

Question 1

Felipe is a consumer who files for, and is granted, a discharge of his debts in bankruptcy. The consequences to Felipe of this discharge are most likely to include

A) blemished credit ratings for up to ten years.
B) favorable publicity.
C) lower interest charges for new debts.
D) unexpected job offers from potential employers.

Answer 1

A

Question 2

Subprime Credit Corporation uses "self-help" repossession when its debtors default on their loans. This simplifies the process of repossession because

A) it can be done without judicial process.
B) it is less stressful for debtors.
C) it provides an incentive for confrontations with debtors.
D) the UCC clearly defines what constitutes "breach of the peace."

Answer 2

A

Question 3

Xtra Credit Company lends money to Yvon, a farmer. Yvon secures the loan with her livestock's feed. Xtra also obtains a security interest in the proceeds from the feed. Yvon defaults on the loan. Xtra can

A) not suffer any loss.
B) suffer a loss of no more than half of the value of the loan.
C) suffer a loss of no more than three-fourths of the value of the loan.
D) suffer a total loss.

Answer 3

D

Question 4

Forest National Bank lends money to Greta, taking a security interest in her assets. Later, Greta files a bankruptcy petition. From Forest National's point of view, once Greta is in bankruptcy, her assets have

A) decreased value, or no value.
B) increased value.
C) the same value.
D) unique value.