What automatically attaches to the debtor's received proceeds from collateral?

A security interest related to the original collateral automatically attaches to the debtor's received proceeds from that collateral. This principle is grounded in the idea that proceeds are fundamentally connected to the original collateral easily traceable back to it. In secured transactions, when collateral is sold, exchanged, or otherwise disposed of, the security interest in the collateral extends to the proceeds from that transaction, ensuring that the secured party's rights remain intact.

When a debtor receives proceeds—such as cash or other forms of value—from the sale or other disposition of the collateral, the initial security interest converts and continues to apply to these proceeds, thereby providing additional protection to the secured party. This automatic attachment is critical because it provides the secured party with a continuing claim to the proceeds and helps ensure collateral remains available as security for the underlying obligation.

While the other answer choices touch on concepts relevant to secured transactions, they do not accurately describe the nature of the attachment of a security interest to proceeds. A perfected security interest may also attach if appropriate steps are taken, but the key focus here is on the automatic nature of the relationship between the original collateral and the proceeds received.