Debtor's Rights Upon Default

Question 1

Secured Party Failed to Comply with Applicable Rules

Answer 1

Liable for debtor’s actual damages for amount of any loss caused by their failure to comply with applicable rules concerning secured transactions.

Question 2

Damage for loss is generally…

Answer 2

…equal to expectation damages, and may include loss resulting from debtor’s inability to obtain alternate financing.

Question 3

Statutory Damages

Answer 3

A debtor may recover $500 in statutory damages for secured party’s failure to comply.

Question 4

Civil Penalty

Answer 4

Is applied if collateral is consumer goods

Question 5

Right of Redemption

Answer 5

Debtor has right to repay obligations and reclaim property held by secured party. Must:
1) fulfill all obligations, and
2) pay reasonable expenses and attorney’s fees

Question 6

Timing of Redemption

Answer 6

May occur at any time before a secured party has:
1) collected collateral
2) disposed of collateral
3) entered into a contract for disposition
4) accepted colalteral in full or partial satisfiaction of obligation

Question 7

Deficiency Judgment Impact

Answer 7

The impact of non-compliance with Article 9 recovery of a deficiency in a consumer goods transaction is left to court to determine.

Question 8

Non-Compliance & Deficiency Judgments

Consumer Goods

Answer 8

Consumer Goods

Some states: absolute bar rule from collecting remaining deficiency

Other states: rebuttable presumption- presumed proceeds from disposition are equal to debt owed

Question 9

Non-Compliance & Deficiency Judgments

Non-Consumer Transactions

Answer 9

Limited to an amount by which the total debt exceeds the greater of: 1) the proceeds of the disposition, or 2) the amount that would have been realized if the secured party complied with provisions.