Asked by Frank Milosevics on Jul 28, 2024
Verified
When a debtor sells collateral,the secured party automatically has an interest in the proceeds the debtor receives in exchange for the collateral.
Collateral
An asset or property that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.
Secured Party
An entity or individual that holds an interest in a debtor's property as security for a debt or obligation, ensuring priority claim over the property if the debt is not repaid.
Proceeds
The money or benefits received from a transaction, especially after the sale of assets or completion of a financial operation.
- Distinguish between perfected and unperfected security interests and their implications in creditor priorities.
- Apprehend the purpose and concepts of collateral, security interests, and secured parties.
Verified Answer
Learning Objectives
- Distinguish between perfected and unperfected security interests and their implications in creditor priorities.
- Apprehend the purpose and concepts of collateral, security interests, and secured parties.
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