[Overextended Debtor] Michael bought a flat screen television for his living room from ABC Electronics, and financed the purchase through ABC Electronics. Later, Michael bought a boat, a new car, and an expensive engagement ring for his girlfriend, and found he was unable to continue making payments on the television. The manager of ABC Electronics called 60 days after the sale and asked Michael to return the television. Michael refused on the basis that ABC Electronics never perfected its interest in the television. He also explained that he had later granted a secured interest in the television along with his other goods to XYZ Credit in return for a loan. No financing statement was filed on behalf of ABC Electronics although XYZ Credit, with no knowledge of any interest of ABC

Question

Electronics, did file a financing statement.If Michael, ABC Electronics, and XYZ Credit have a dispute regarding entitlement to the television, who is likely to win and why?

A. XYZ Credit will prevail because although ABC Electronics had a perfected security interest, it did not file a financing statement.
B. XYZ Credit will prevail because it had a perfected security interest in a greater amount of goods than did ABC Electronics.
C. ABC Electronics will prevail because, as a seller of consumer goods, it did not need a perfected security interest in order to prevail against other creditors.
D. XYZ Credit will prevail because a luxury good was involved and, although ABC Electronics had a perfected security interest, it did not file a financing statement as required within 10 days of the sale.
E. ABC Electronics will prevail because it had a perfected security interest.

Answer 1

Answer: A