Secured Transactions Exam Review

Flashcards for vocabulary review.

Unsecured Creditor

A creditor who lends money to a debtor without taking any collateral to secure the loan.

Uniform Voidable Transactions Act

A set of laws that governs transactions that can be voided or reversed, such as when a debtor transfers assets to avoid paying creditors.

Collateral

An asset that a borrower offers to a lender to secure a loan. If the borrower defaults, the lender can seize the collateral to recover the debt.

Farm Product

Goods are farm products if they are crops, livestock, or supplies used in farming operations.

Inventory

Goods held for sale or lease or raw materials used in a business.

Consumer Goods

Goods used or bought for use primarily for personal, family, or household purposes.

UCC

A comprehensive set of laws governing commercial transactions in the United States.

Chattel Paper

A record or records that evidence both a monetary obligation and a security interest in specific goods or a lease of specific goods.

General Intangible

Any personal property (including things in action) other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction.

Debtor

A person who owes money to another.

Obligor

A person who owes payment or other performance of the obligation.

Bright-Line Test

A clear and objective standard used to determine the nature of a transaction, such as whether a lease is actually a disguised sale.

Attachment

The point at which a security interest becomes enforceable against the debtor with respect to the collateral.

Security Agreement

An agreement that creates or provides for a security interest.

Repossession

The act of retaking possession of collateral when a debtor defaults on a loan.

Breach of Peace

Disruptive or unlawful behavior that violates public order and tranquility during repossession.

Foreclosure

The legal process by which a lender takes possession of a property when a borrower fails to repay the loan.

Proceeds

Whatever is received upon the sale, exchange, collection, or other disposition of collateral.

Bankruptcy Stay

An injunction that automatically stops lawsuits, foreclosures, and most collection activity against the debtor when a bankruptcy petition is filed.

Perfection

The process of making a security interest enforceable against third parties, typically by filing a financing statement.