Credit Security Law (United States)

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As a credit security (. Engl Secured Transactions ) refers to the laws of the United States , a jurisdiction that deals with the protection of the repayment of loans and other credit operations (such as buying on credit) by a loan security (collateral) occupied: In case of payment delay or failure ( default ) the creditor may (creditor) the collateral sell and be satisfied from the proceeds. It is regulated in Article 9 of the Uniform Commercial Code. It is not legally binding, but states can incorporate it into state law. Two important steps are required after the UCC to ensure full security: attachment and perfection.

Types of collateral

The types of collateral are extremely diverse. They can consist of driving skills, rights, intellectual property, etc. One differentiates u. a .:

  1. Consumer goods (consumer goods)
  2. Inventory (inventory)
  3. Means (equipment)
  4. Claims (account, these are not bank accounts, as the name suggests, but so-called accounts receivable )
  5. Bank accounts (deposit accounts)

Attachment

By attachment arises at all only a security interest in a collateral. Usually the parties generate this via a signed security agreement. Three prerequisites are necessary for its effectiveness:

  1. it must adequately describe the collateral ,
  2. the security debtor must have some right to the collateral ,
  3. the security creditor must have provided a consideration (give value).

Furthermore, attachment by possession (possession) or control (control) of the collateral take place.

Perfection

Finally, through perfection , the security creditor informs third parties that he has a security interest . In this way he ensures his priority over other creditors. To do this, he must send a financing statement to the competent authority in the respective state. However, special rules apply to the perfection of a security interest in motor vehicles, components (fixtures) of real estate, things in possession or control of the security creditor . So-called purchase money security interests for consumer goods occupy a special position .

Priority (~ rank)

The following rules apply to the rank of multiple security interests :

  1. perfected security interests have priority over unperfected security interests,
  2. if several security interests are already perfected , the one that sent the application for perfection first or that was actually perfected first takes precedence ,
  3. purchase money security interests always take precedence over non- purchase money security interests,
  4. perfected security interests take precedence over bankruptcy creditors,
  5. Anyone who buys in the ordinary course of business can purchase without any security interests .

Rights in the event of payment default

In default of the debtor of the secured party, the collateral put without state involvement in his possession or under his control, as far as this has no one breach of the peace comes. Breach of the peace is any act that has the inherent possibility of violent consequences.

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