Kelly borrows $12,000 from Terry Oswald to pay for her mother's surgery. The debt-repayment period is 15 months, but Kelly manages to repay it in 11 months. Which of the following must be filed by Oswald after receiving the final installment of his money?
A) financing statement
B) statement of collateral claim
C) termination statement
D) continuation statement

Question

Quizplus · Accepted Answer

A termination statement is filed by the creditor to show that the debt has been fully paid and the security interest in any collateral has been terminated. In this scenario, Terry Oswald has received the final installment of his money from Kelly, which indicates that the debt has been fully repaid. Hence, he must file a termination statement to inform the concerned authorities and other interested parties that he no longer has any security interest in Kelly's collateral. A financing statement is filed when a creditor provides a loan and takes a security interest in the borrower's collateral. A statement of collateral claim is used when a third party has an interest in the collateral that is superior to the creditor's interest. A continuation statement is filed to extend the period of effectiveness of a financing statement. None of these forms applies in this situation since the debt has been fully repaid.

Kelly Borrows $12,000 from Terry Oswald to Pay for Her