Question

Jennifer Garner needs $2,500 to purchase textbooks, online materials, and other school supplies. Charlie Pride agrees to loan Jennifer $2,500, accepting as collateral Jennifer’s car. They put their agreement in writing and sign it. Jennifer keeps possession of the car. Does Charlie have an enforceable security interest? What is required? How can Charlie let other creditors know of his interest in the car? How is this properly accomplished? Explain fully

Answer 1

answer-

Creditor must meet three requirements to have enforceable security interest-

1.There must be a written or authenticated security agreement that clearly describes the collateral subject to the security interest and is signed or authenticated by the debtor.

2.The secured party must give something of value to the debtor.

3.The debtor must have “rights” in the collateral

Based on these three requirements, Charlie have an enforceable security interest because He met first requirement where both party put agreement in writing and signed it. second, Charlie would give Jennifer $2500 to purchase textbooks, online materials, and other school supplies. so money is the value and third Charlie will acccept jennifer's car as collateral for the debt.

Charlie can let other creditors know of his interest in the car by completing perfection process. It is a legal process which protect secured parties from claims by third parties in the same collateral.

Perfection can be accomplished by filling a financila statement . This is the statement signed or officially authorized by appropriate government official to give public notice to third parties about the security interest of secured parties in collateral.

Charlie and Jeniffer can have financial statement from approrpiate filing office of the state, pay filing fee. The communication of filling can be done electronically.