What is the likely effect on perfection when a financing statement is filed under an incorrect name?

A) Perfection is effective if the secured party's name is incorrect, but not if the debtor's name is incorrect.
B) Perfection is effective if the debtor's name is incorrect, but not if the secured party's name is incorrect.
C) Perfection is effective if the error involves the name of a corporation, but not if the error involves the name of an individual.
D) The perfection is likely not effective.
E) There is usually no effect on perfection.

Question

Gautam Dugar · Accepted Answer

Final Answer : D, Explanation :  The effectiveness of a financing statement and thus the perfection of a security interest can be significantly compromised if the financing statement is filed under an incorrect name, especially if the error makes it difficult for subsequent creditors or interested parties to discover the filing. This is particularly true for errors in the debtor's name, as searches are typically conducted under the debtor's name to find any filed financing statements.

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