purchase money security interest - can someone explain?

[whoisonfirst]

What is the name of your state? OR

Does anyone out there know if a creditor can claim a "purchase money security interest" even if no such claim or clause exists in the credit agreement? (This is the kind of security interest you might expect from a department store charge for furniture or appliances.) If so, how might this affect a Chapter 7 filing?

Also, what kind of terms or language am I looking for in my credit agreements? Will they actually say "purchase money security interest" or something else? Or can there be a purchase money security interest that is only implied and not stated outright?

The reason I ask is because some of my debts may, in fact, be secured in this way, even though I never realized it.

Now that I know about this concept, I want to learn more.

Thanks in advance!

 

[AttorneyOney]

A "purchase money" security interest is, according to UCC section 9-103(2), one that secures payment of the price of something.

There is no such thing as an implied security interest. You have to sign something explicitly granting one. The security agreement won't necessarily say "this is a purchase money security interest", however.

The phrase comes up in bankruptcy because of the favored position such interests have in debtor-creditor law. For example, section 522(f)(1)(B) allows a debtor to avoid a nonpossessory nonpurchase-money security interest in household goods that would otherwise be exempt. This is how you get out from under cross-collateral clauses, where the seller of your TV takes a security interest in your kid's badminton set too.

 

[whoisonfirst]

Thanks!

Thanks for the explanation!