Question 1

Which of the following was the result in the case in the text In re Girolamo Afonica,the case in which a debtor's bankruptcy discharge was challenged by a bank that held a security interest in a vehicle that the plaintiff,without notice to the bank,transferred to a junk dealer because his ex-wife did not like it sitting in her driveway?

Accepted Answer

A)  The court found that the defendant's bankruptcy discharge would be allowed in total,including the discharge as to the vehicle,because the vehicle was worth less than $1,000 at the time of transfer.
B)  The court found that the defendant's bankruptcy discharge would be allowed in total,including the discharge as to the vehicle,because the bank failed to notify the defendant that he was required to provide notification prior to disposing of collateral.
C)  The court found that the debtor transferred the vehicle with the specific intent to hinder,delay,or defraud the plaintiff and that his discharge would be denied in total as to all debts,not just the one owed to the plaintiff bank.
D)  The court found that the defendant's bankruptcy discharge would be allowed in total,including the discharge as to the vehicle,because the bank failed to prove that the defendant acted with malice.
E)  The court found that the defendant's bankruptcy discharge would not be denied in total,but that the discharge as to the plaintiff bank's interest would be denied.F) A) and E)
G) A) and D)

Question 2

Set forth the steps that a creditor must take to become a secured party.

Accepted Answer

To become a secured party,the ...

Question 3

For how long is a financing statement valid under the UCC,once the statement has been filed with a correct agency?

Accepted Answer

A)  1 year
B)  2 years
C)  3 years
D)  4 years
E)  5 yearsF) B) and D)
G) A) and D)

Question 4

Which of the following was the result in the bankruptcy case in the text,In re Robert O.Troupe and Dawn Lynn Troupe,involving the issue of whether a tractor dealer's failure to file a financing statement rendered its purchase money security interest unperfected because the tractor was equipment used for business purposes,or whether the security interest was automatically perfected as an interest in a consumer good?

Accepted Answer

A)  The tractor dealer prevailed because although representations made by the buyers on the security agreement were not controlling,the buyers were using the tractor as a consumer good at the time of default,the time at which classification of collateral is made in any dispute.
B)  The bankruptcy trustee prevailed because when at the time of default,collateral is used partly as a consumer good and partly as equipment in a business endeavor,the collateral loses its status as a consumer good.
C)  The bankruptcy trustee prevailed because the consumers made misrepresentations at the time of the sale as to the use of the tractor and wrongfully claimed that it was for consumer use when it was actually to be used as equipment in a business endeavor.
D)  The bankruptcy trustee prevailed because although no misrepresentations were made at the time of the sale,the tractor was being used as equipment in a business endeavor at the time of default;and the time of default is the point at which issues involving use are determined.
E)  The tractor dealer prevailed because classification of collateral is determined as of the time of the creation of the security interest,and the consumers were bound by the representation on the security agreement that the tractor was to be used as consumer goods.F) C) and D)
G) A) and D)

Question 5

Which of the following is true regarding a security interest in consumer goods?

Accepted Answer

A)  Under federal consumer protection legislation,a seller may not hold a security interest in consumer goods.
B)  A financing statement must be filed in order to perfect a security interest in consumer goods.
C)  When a creditor sells a consumer good to a debtor on a credit basis,the security interest perfects automatically.
D)  Under most state laws,a seller may not hold a security interest in consumer goods.
E)  When a creditor sells a consumer good to a debtor on a credit basis,the security interest is perfected by the seller's possession.F) A) and C)
G) A) and B)

Question 6

Which of the following is a writing that indicates both a monetary obligation and a security interest in specific goods?

Accepted Answer

A)  Transactional paper.
B)  Specific interest paper.
C)  Chattel paper.
D)  Combined paper.
E)  Monetary and secured paper.F) C) and D)
G) A) and C)

Question 7

Trevor goes to the AutoShop and purchases a new truck on credit for his business.He signs an agreement with AutoShop under which the truck is the collateral for AutoShop's loan to him.Trevor then goes to First Bank and signs an agreement for a loan so that he can buy supplies for his business.Do either of these agreements involve a purchase-money security interest?

Accepted Answer

A)  The agreement with First Bank is a purchase-money security interest.
B)  Both agreements are a purchase-money security interest.
C)  Neither of the agreements involved a purchase-money security interest.
D)  The agreement with AutoShop is a primary purchase-money security interest and the agreement with First Bank is a secondary purchase-money security interest.
E)  The agreement with AutoShop is a purchase-money security interest.F) D) and E)
G) A) and B)

Question 8

The property that is subject to a security interest is called collateral.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Accepted Answer

A)  As long as the buyer is not aware of the security interest,purchases the good for his or her personal use,and purchases the good before the secured party files a financing statement,the new buyer obtains the good free of the security interest.
B)  As long as the buyer is not aware of the security interest,purchases the good for personal use or resale,and purchases good before the secured party files a financial statement,the buyer obtains the good free of the security interest.
C)  Regardless of whether the buyer is aware of the security interest,so long as the buyer purchases the good for his or her personal use,the security interest terminates if the sale to the new buyer is made before the original secured party files a financial statement.
D)  The security interest passes to the new buyer.
E)  The security interest immediately terminates.F) C) and E)
G) A) and C)

Question 10

Which of the following is true regarding what may constitute collateral?

Accepted Answer

A)  Goods and intangibles may constitute collateral,but indispensable paper and proceeds may not.
B)  Goods may constitute collateral,but indispensable paper,intangibles,and proceeds may not.
C)  Goods,indispensable paper,intangibles,and proceeds may all constitute collateral.
D)  Goods and proceeds may constitute collateral,but indispensable paper and intangibles may not.
E)  Goods,indispensable paper,and intangibles may constitute collateral,but proceeds may not.F) A) and B)
G) None of the above

Question 11

Value is consideration,according to the UCC.

Accepted Answer

A) True 
 B)False

Question 12

If a bank wants to ensure it will not have to expend efforts in repossession,which of the following methods of perfection should it use?

Accepted Answer

A)  Perfection by possession.
B)  Automatic perfection.
C)  Perfection by movable collateral.
D)  Perfection by filing.
E)  A bank cannot ensure it will not have to repossess the collateral.F) B) and C)
G) All of the above

Question 13

Which statement is correct regarding Meredith's repossession of the pick-up truck?

Accepted Answer

A)  Meredith breached the peace in recovering the collateral.
B)  Meredith did not breach the peace because she was entitled to repossess the vehicle and any injury sustained by Jill was her own fault.
C)  Meredith breached the peace,but only because she acted to repossess the collateral after 10:00 p.m.at night.
D)  Meredith breached the peace,but only because she did not provide Jill with prior notification that she was coming to repossess the collateral.
E)  Meredith did not breach the peace in recovering the collateral unless Jill can establish the existence of actual injuries.F) B) and D)
G) A) and D)

Question 14

Generally,unsecured parties have priority over secured creditors.

Accepted Answer

A) True 
 B)False

Question 15

If First Bank had properly perfected its security interest,which creditor's interest would take priority?

Accepted Answer

A)  First Bank,because in a dispute between a secured perfected creditor and a secured unperfected creditor,the secured perfected creditor takes priority.
B)  First Bank,because in a dispute between two secured but unperfected creditors,the party who attached first takes priority.
C)  First Bank,because in a dispute between two secured and perfected creditors,the party who perfected first takes priority.
D)  The two banks will have equal rights to the property.
E)  Second Bank,because "after-acquired property" is not specific enough to grant attachment right to First Bank,and,thus,the secured agreement of Second Bank takes priority.F) A) and E)
G) B) and C)

Question 16

Which of the following under the UCC is a good used or bought for use primarily for personal,family,or household purposes?

Accepted Answer

A)  An approved good.
B)  A financed good.
C)  A retail good.
D)  A consumer good.
E)  A pledged good.F) None of the above
G) B) and E)

Question 17

When perfection by possession occurs,the parties must have a written security agreement.

Accepted Answer

A) True 
 B)False

Question 18

[Repo] Meredith sells used cars and trucks.She sold a used pick-up truck to Jill and a used convertible to Caleb.She properly obtained a security interest in both vehicles.Both Jill and Caleb defaulted on payments owed to Meredith for the vehicles.Meredith was under the belief that her only option was to take possession of the collateral.She decided to repossess Jill's pick-up at Jill's house.Meredith slipped into Jill's driveway after midnight and started the truck's engine.Jill immediately ran out and confronted Meredith.Meredith shoved Jill away and drove off in the pick-up truck.Meredith was able to repossess Caleb's convertible in a public parking lot with no altercation with him.
-Which statement is correct regarding Meredith's belief that her only option was to take possession of the collateral?

Accepted Answer

A)  Meredith was incorrect because regardless of whether a vehicle or another type of good was involved,Meredith only had the right to ignore the collateral and proceed to judgment.
B)  Meredith was correct regardless of whether a vehicle or another type of good was involved.
C)  Meredith was incorrect,because only when a vehicle is involved,a party must disregard the collateral and proceed to judgment.
D)  Meredith was correct,but only because a vehicle was involved.
E)  Meredith was incorrect because regardless of whether a vehicle or another type of good was involved,Meredith had the right to either take possession of the collateral or ignore rights in the collateral and proceed to judgment.F) B) and D)
G) A) and D)

Question 19

Does the fact that the financing statement was filed four years ago affect the bank's claim?

Accepted Answer

A)  No,under the UCC,a financing statement is valid indefinitely.
B)  No,under the UCC,a financing statement is valid for five years.
C)  Yes,under the UCC,a financing statement is valid for three years and can be automatically renewed for two year increments.
D)  Yes,under the UCC,a financing statement is valid for two years.
E)  Yes,under the UCC,a financing statement is valid for three years.F) A) and C)
G) A) and B)

Question 20

Which of the following is an amendment to a financing statement that states that the debtor has no obligation to the secured party?

Accepted Answer

A)  A termination statement.
B)  A reversion statement.
C)  A bind-up statement.
D)  A release statement.
E)  An ending statement.F) B) and C)
G) All of the above

Exam 30: Secured Transactions

Which statement is correct regarding Meredith's repossession of the pick-up truck?

Correct Answer
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Does the fact that the financing statement was filed four years ago affect the bank's claim?

Correct Answer
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When perfection by possession occurs,the parties must have a written security agreement.

Correct Answer
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Which of the following is a writing that indicates both a monetary obligation and a security interest in specific goods?

Correct Answer
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Correct Answer
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The property that is subject to a security interest is called collateral.

Correct Answer
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Which of the following is true if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Correct Answer
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Which of the following is true regarding a security interest in consumer goods?

Correct Answer
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Value is consideration,according to the UCC.

Correct Answer
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If a bank wants to ensure it will not have to expend efforts in repossession,which of the following methods of perfection should it use?

Correct Answer
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Which of the following is an amendment to a financing statement that states that the debtor has no obligation to the secured party?

Correct Answer
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Set forth the steps that a creditor must take to become a secured party.

Correct Answer
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To become a secured party,the ...
View Answer

Which of the following under the UCC is a good used or bought for use primarily for personal,family,or household purposes?

Correct Answer
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Correct Answer
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For how long is a financing statement valid under the UCC,once the statement has been filed with a correct agency?

Correct Answer
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If First Bank had properly perfected its security interest,which creditor's interest would take priority?

Correct Answer
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Correct Answer
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Correct Answer
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Which of the following is true regarding what may constitute collateral?

Correct Answer
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Generally,unsecured parties have priority over secured creditors.

Correct Answer
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Exam 30: Secured Transactions

Which statement is correct regarding Meredith's repossession of the pick-up truck?

Correct AnswerverifiedShow Answer

Does the fact that the financing statement was filed four years ago affect the bank's claim?

Correct AnswerverifiedShow Answer

When perfection by possession occurs,the parties must have a written security agreement.

Correct AnswerverifiedShow Answer

Which of the following is a writing that indicates both a monetary obligation and a security interest in specific goods?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The property that is subject to a security interest is called collateral.

Correct AnswerverifiedShow Answer

Which of the following is true if a buyer of a consumer good subject to purchase-money security interest later sells the good?

Correct AnswerverifiedShow Answer

Which of the following is true regarding a security interest in consumer goods?

Correct AnswerverifiedShow Answer

Value is consideration,according to the UCC.

Correct AnswerverifiedShow Answer

If a bank wants to ensure it will not have to expend efforts in repossession,which of the following methods of perfection should it use?

Correct AnswerverifiedShow Answer

Which of the following is an amendment to a financing statement that states that the debtor has no obligation to the secured party?

Correct AnswerverifiedShow Answer

Set forth the steps that a creditor must take to become a secured party.

Correct AnswerverifiedTo become a secured party,the ...View AnswerShow Answer

Which of the following under the UCC is a good used or bought for use primarily for personal,family,or household purposes?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For how long is a financing statement valid under the UCC,once the statement has been filed with a correct agency?

Correct AnswerverifiedShow Answer

If First Bank had properly perfected its security interest,which creditor's interest would take priority?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true regarding what may constitute collateral?

Correct AnswerverifiedShow Answer

Generally,unsecured parties have priority over secured creditors.

Correct AnswerverifiedShow Answer

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To become a secured party,the ...
View Answer

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