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Will you describe a purchase money security considered in 11 USC 522(f)?

Nashville, TN |

Does a purchase money security interest typically exist with a credit card or open-end credit plan when I use that line of credit to make a purchase?
The "Terms and Conditions" of the open-end credit plan specifically state "We will not take any security interest to secure this Account."
I see no reference to "security Interest" in the "Cardmember Agreement"

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Attorney answers 3

Best Answer

Purchase money security interest is when for example you buy a house and take out a loan to fund the purchase or buy a car with a loan. If you refinance a mortgage, then your loan is not a purchase money security interest or if you get a pink slip loan on a car that is also not a purchase money security interest. Credit cards are unsecured so there is no security interest, with the exception of some store cards like Best Buy or credit from Jeromes Furniture to buy furnishings.

I am not YOUR lawyer. You should not rely on answers to questions as legal advice. For legal advice you should contact a law firm for a consultation. Tokarska Law Center 185 West F Street #100, San Diego, CA 92101 (619) 285-1992 Tokarska Law Center is a Federal Debt Relief Agency representing individuals and businesses in filing for bankrutpcy protection under the U.S. Bankrutpcy Code.


Purchase money security credit cards are generally store credit accounts, such as a furniture store, jewelry store, electronics store, tire store etc. where the seller has the right to repossess the merchandise if payment isn't made. If you want to study this topic in more depth, you should look for information pertaining to the UCC. Hope this perspective helps!



I have a "Credit Card Account Agreement" which states that the Agreement is between me and GE Capital Retail Bank. The credit card can only be used for purchases at Electronic Express. There is no mention of UCC or security interest on any documents or agreements. For a purchase money security interest to exist, is the creditor required to either inform me of the "security interest " or make a UCC filing?


Not typical it would be a credit card from a furniture company or a Best Buy would be common examples. A Purchase money security interest is where the creditor takes a security interest in property you buy from them. A common example which is not an open ended agreement is a car loan.

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