[Dirty Laundry] Morgan planned to start her own laundry business. She borrowed $60,000 from ABC Bank. She used her car and home as collateral and also gave ABC Bank an interest in any property she acquired after the security interest was made. The bank perfected its interest. Morgan purchased a new computer from XYZ Electronics for use in her business. XYZ obtained a purchase money security interest on the computer. Morgan was having problems with cash flow and failed to make payments to XYZ Electronics on the new computer. After the sale and before Morgan stopped making payments, XYZ had filed a financing statement. The electronics store sought to repossess the computer, but the bank opposed that. Morgan's business picked up and she was able to completely repay her loan to the bank and to XYZ. She requested that the bank discontinue its security interest, but the bank did not do so as requested by Morgan, and still had not done so 45 days after Morgan had paid off the loan and requested that the bank terminate its interest.
-Which statement is correct regarding the effect of XYZ Electronics filing a financing statement?
A) The interest was perfected.
B) The interest was guaranteed.
C) The interest was secured.
D) The interest was acknowledged.
E) There was no effect because there can only be one security interest, and the bank already had that.

Question

Quizplus · Accepted Answer

Filing a financing statement is a step in the process of perfecting a security interest, which gives the creditor priority over other creditors who claim an interest in the same collateral.

[Dirty Laundry] Morgan Planned to Start Her Own Laundry Business