When the filing of a financing statement is defective: ______.
A) the security interest is lost.
B) the filing fails to perfect the security interest.
C) the security interest is perfected through the court's application of equitable principles.
D) the public notice of the creditor's interest is still effective.

Question

Quizplus · Accepted Answer

If the filing of a financing statement is defective, it fails to perfect the security interest. This means that the security interest may not be enforceable against other creditors, bankruptcy trustees, or other parties who have claims to the collateral. However, the public notice of the creditor's interest is still effective to the extent that it was properly filed. The creditor may be able to enforce the security interest through the court's application of equitable principles, but this is not automatic and will depend on the specifics of the situation.

When the Filing of a Financing Statement Is Defective: ______