Question 1

The initial term for which a financing statement will be effective is

Accepted Answer

The initial term for which a financing statement will be effective is five years. This is a standard duration under the Uniform Commercial Code (UCC) for such statements, which are used to perfect a security interest in collateral.

Question 2

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

Accepted Answer

The Uniform Commercial Code requires that the time, place, manner, and method of disposal of repossessed collateral must be commercially reasonable. This means that the sale or disposition must be done in a way that maximizes the value of the collateral, without being overly burdensome on the debtor. The other options are not required for the disposal of repossessed collateral.

Question 3

Explain the difference between attachment and perfection.

Accepted Answer

The answer of Explain the difference between attachment and perfection....

Question 4

Ken decided to open a retail boat dealership. He expects that many of his sales will be credit sales. What should Ken do to protect his interests in the collateral in the credit sales that he makes?

Accepted Answer

The answer of Ken decided to open a retail boat...

Question 5

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.

Accepted Answer

The answer of Fowler Bros. has applied to Gibralter Bank...

Question 6

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?

Accepted Answer

Under the Uniform Commercial Code (UCC), for the purpose of perfecting a security interest through a financing statement, if the debtor is an individual, the filing must be made in the state of the debtor's principal residence. In this scenario, since Chmelik lives in Illinois, the filing should have been made in Illinois, not Indiana, regardless of where he works or where the creditor is located.

Question 7

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)Is Iris able to redeem 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?

Accepted Answer

The answer of Gateway sold a big-screen TV and entertainment...

Quiz 16: Secured Transactions

The initial term for which a financing statement will be effective is

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

Explain the difference between attachment and perfection.

Ken decided to open a retail boat dealership. He expects that many of his sales will be credit sales. What should Ken do to protect his interests in the collateral in the credit sales that he makes?

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.