No financing statement must be filed for perfection of a security interest if the creditor has physical possession of the collateral.

Question

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According to the Uniform Commercial Code (UCC), a financing statement must be filed to perfect a security interest in most cases. However, there is an exception when the creditor has physical possession of the collateral, in which case no financing statement is required. This is known as a "pledge" of collateral.

No Financing Statement Must Be Filed for Perfection of a Security