10 Judicial Sale & Deficiency Flashcards
Q1
S is dealer in automobiles. S sells new automobile to A who intends to use car for his personal everyday driving. Cash price of model would be $16,000, but since A doesn’t have the cash he purchases it on an installment plan. Plan is for 48 monthly payments of $384.95 each. Almost immediately A falls behind in his payments. S has the car repossessed and returned to his lot. A week after the repossession, A receives an official-looking letter from S indicating what has happened and that he, S, has himself “repurchased the vehicle in question for $12,350. Because the outstanding amount you owed on said vehicle was $16, 167.90 (42 payments still due of $384.95 each), I expect a deficiency of $3,817.90”
(a) A comes to your office, tells you this story, and shows you the letter from Sam. He asks whether he has to pay the amount Sam is demanding. What aspects of Article 9 do you consult and how do you counsel Andrew?
Assuming no criminal civil liabilities for conversion.
IA plan total = $18,477.6
BD = $16, 167.90
Resell = $12,350
(1) §9-610 - how proceeds must be distributed. “After default, a secured party may…dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing”
(2) §9-615(a) - how proceeds must be paid;
(3) §9-611 to §9-614 for Notice requirements
(4) §9-615(f) for sell to insider.
Q1
S is dealer in automobiles. S sells new automobile to A who intends to use car for his personal everyday driving. Cash price of model would be $16,000, but since A doesn’t have the cash he purchases it on an installment plan. Plan is for 48 monthly payments of $384.95 each. Almost immediately A falls behind in his payments. S has the car repossessed and returned to his lot. A week after the repossession, A receives an official-looking letter from S indicating what has happened and that he, S, has himself “repurchased the vehicle in question for $12,350. Because the outstanding amount you owed on said vehicle was $16, 167.90 (42 payments still due of $384.95 each), I expect a deficiency of $3,817.90”
(b) would the situation be any different if Andrew had bought the car not for his personal use but so that he could use it in his job as a traveling salesman?
valuation of the car would be different…..
Q1
S is dealer in automobiles. S sells new automobile to A who intends to use car for his personal everyday driving. Cash price of model would be $16,000, but since A doesn’t have the cash he purchases it on an installment plan. Plan is for 48 monthly payments of $384.95 each. Almost immediately A falls behind in his payments. S has the car repossessed and returned to his lot. A week after the repossession, A receives an official-looking letter from S indicating what has happened and that he, S, has himself “repurchased the vehicle in question for $12,350. Because the outstanding amount you owed on said vehicle was $16, 167.90 (42 payments still due of $384.95 each), I expect a deficiency of $3,817.90”
(c) Suppose instead the story told to you by Andrew is as follows: Soon after the repossession he received a notice from S officially notifying him of the repossession and that he, S, intended to place the car on his used car lot for resale within a week. Three weeks later, A receives a second notice from S informing him that the car has been sold to J for $14,000. It also states that S’s cost of repossessing the auto was $300 and that he spent $175 for minor repairs and cleaning prior to putting the car back on his used car lot. S claims a deficiency of $2,642.90 ($16,167.90 due him minus $13, 525 he netted from the resale). Do you see any arguments for Andrew in this situation that he is not responsible for the deficiency?
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