First Finance Company filed its financing statement for a purchase money security interest in Donald's lawn tractor on March 1. Donald purchased the lawn tractor on February 21. If Donald files for bankruptcy on February 28, the trustee will have priority because the bankruptcy petition is filed before the creditor perfects.

Question

Quizplus · Accepted Answer

Under UCC Article 9, a purchase money security interest (PMSI) in consumer goods is automatically perfected when the security interest attaches, which generally occurs when the debtor has rights in the collateral and value is given by the secured party. Since the lawn tractor is considered consumer goods and the financing statement was filed to perfect the PMSI, the filing date relative to the bankruptcy filing date is not relevant for perfection in this case. The PMSI would have priority over the bankruptcy trustee from the point of attachment, assuming all requirements for a PMSI are met.

First Finance Company Filed Its Financing Statement for a Purchase