Contracts - UCC Art 9 - Secured Transactions - Rights of Secured Parties & Debtors

Question 1

Describe the 60% rule as it relates to a secured party.

Answer 1

If the collateral is consumer goods and 60% or more of the debt or price has been paid then creditor must sell the goods.

Question 2

Explain what a breach of the peace is.

Answer 2

A violation of the law in repossessing collateral, such as a trespass to take the property.

Question 3

List the rights of peaceful possession upon the debtor’s default.

Answer 3

Possession without committing:

1. Trespass;
2. Assault and/or battery;
3. Breaking and entering.

Question 4

List the order of distribution of proceeds from the sale of collateral.

Answer 4

1. Expenses in repossession, keeping, and resale;
2. Balance of debt owed to secured party;
3. Junior lien holders who have made written demands;
4. Debtor unless collateral is accounts or chattel paper.

Question 5

What is the purpose of the Soldiers and Sailors Relief Act?

Answer 5

Creditor cannot repossess goods from active duty military debtors.

Question 6

List the rights upon possession by a secured party.

Answer 6

1. Secured party with proper notice to Debtor and others and no objection can keep the collateral in satisfaction of the debt. Cannot keep if collateral is consumer goods and debtor ahs paid 60% or more;
2. Can always sell in a reasonable commercial manner.

Question 7

Describe the right of redemption.

Answer 7

If the secured party is not allowed to keep the collateral in possession in full satisfaction of the debt, until there is a sale the debtor or any other secured party has a right of redemption and by doing so can regain possession of the collateral.

Question 8

What are the debtor’s rights when the debt is paid in full?

Answer 8

The debtor can demand that the creditor file a release of the collateral.