Michigan Collections Manager License Practice Test

If a debtor cannot be in possession, what is this referring to?

1. In the case of consumer goods

2. In the case of real estate

3. In the case of business assets

4. In the case of cash payments

The correct answer is: In the case of consumer goods

The phrase "if a debtor cannot be in possession" typically refers to situations involving consumer goods. This concept arises from the legal principle that, in certain instances, debtors may not be in physical control or possession of the personal property they owe debt on, often due to repossession or other forms of enforcement actions by creditors. For consumer goods specifically, when a debtor defaults on a loan secured by such goods, creditors have the right to reclaim those items, and thus the debtor may be considered not to be in possession of them anymore. It's a common occurrence in the context of secured transactions where collateral is involved, and creditors have exercised their right to repossess goods when payments are not made. In contrast, the other choices relate to different types of assets: real estate, business assets, and cash payments, each governed by distinct legal considerations. Unlike consumer goods, which can be physically removed by creditors, real estate involves different processes like foreclosure, business assets might be subject to liens, and cash payments do not typically involve possession in a tangible sense.