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The document that creditors file to protect a security interest is known as a ______.

a. Title
b. Credit agreement
c. Financing statement
d. Lien

User ScottF
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1 Answer

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Final answer:

A financing statement is the document filed by creditors to secure a legal claim over the borrower's collateral for a loan, allowing them to seize and sell the property if the loan is not repaid.

Step-by-step explanation:

The document that creditors file to protect a security interest is known as a financing statement. When a bank or lender requires collateral for a loan - property or equipment that can be seized and sold if the loan is not repaid - they establish a legal claim to that collateral through a financing statement. This form, typically filed with a government office like the Secretary of State, publicly declares the creditor's right to claim the collateral if the borrower defaults on the loan.

User Virtualmic
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