CH 30 SECURED TRANSACTIONS #2 1) How long is a financing statement effective? Ho
ID: 2770185 • Letter: C
Question
CH 30 SECURED TRANSACTIONS #2
1) How long is a financing statement effective? How can it be extended?
2) What is the creditor's obligation realted to a filed financing statement once the debt is paid off by the debtor?
3) Upon debtor's default what rights does the creditor have to the collateral?
4) If upon repossesiion and resale the creditor gets an amount IN EXCESS of the debt can the creditor keep it?
5) If upon repossession and resale the creditor gets an amount LESS that the outstanding debt does the creditor have any further legal rights against the debtor?
Explanation / Answer
Ans 1) Financial statements are generally effective for the period of 5 years from the date it got submitted to the appropriate authority. It can be further extended for another 5 years.
Ans 2) Creditor should send the termination letter/ statement of termination letter to the debtors mentioning that debt is fully paid and oblilgation is terminated. A copy is also need to be sent to the concerned authority.
Ans 3) Creditor can claim the collateral to the effect of the loan or can sell the collateral to get its loan back.
Ans 4) No Creditor can retain that excess money with him, he should give ot back to the debtors.
Ans 5) If credtor could not get back its entire loan amount after selling off the collateral then credit may have an option of getting defaulter jusgement or deficiency judgement against the debtors.