Consider the following statements about the use of personal property as security for a creditor in a creditor-debtor transaction. Indicate the false statement.
A) If the transaction involves the use of consumer goods as collateral, upon default of payment by the debtor, the creditor can seize the goods and sell them, but also always retains the right to sue the debtor on his personal covenant to pay for any deficiency.
B) Regardless of the type of personal property involved, whether tangible or intangible, as long as it is being used as security then the transaction is governed by the Personal Property Security Act, and therefore an unpaid creditor may be able to repossess them.
C) Real estate professionals need to be aware of the Personal Property Security Act because items that constitute fixtures under real property law may also constitute chattel security, and thus an unpaid creditor may be able to repossess them.
D) Before a creditor who has been promised an interest in personal property as security can claim priority rights, two processes must have taken place: the security interest must have attached to the collateral item, and the security must have been perfected.
E) If the required procedures have taken place, a potential buyer from an unscrupulous debtor who has already given personal property as security will be protected; i.e., the creditor will either have registered his interest in the Personal Property Registry or will have actual possession of the collateral.

Question

Quizplus · Accepted Answer

A) is false because while a creditor can indeed seize and sell the consumer goods used as collateral upon the debtor's default, the right to sue the debtor for any deficiency depends on the jurisdiction and the specific terms of the agreement between the debtor and creditor. It's not always an automatic right.

Consider the Following Statements About the Use of Personal Property