default

Question 1

default

Answer 1

grounds of default typically in security agreement. look for late or missed payments, also look for possible waiver my secured party of late or missed payments

Question 2

self-help repossession

Answer 2

after default, secured party is entitled to take possession of collateral w/o judicial process if this can be done w/o breach. of the peace. if secured party breaches peace, may be sued for conversion (or any other torts) and is liable for actual and punitive damages

Question 3

what constitutes breach of the peace

Answer 3

conduct by secured party that has potential to lead to violence. physical presence by debtor and verbal objection is enough to create breach of peace if they continue repossession.

unauthorized entry into a home is probably a breach. but taking car from driveway is fine. simple trespass into garage is not breach of peace

business premises - can usually enter, but picking lock is breach if premises are left unlocked and subject to theft

Question 4

repossession of equipment

Answer 4

if not easily movable, can make equipment unusable and dispose of it on debtor’s property w/o breach of peace

Question 5

self-help in accounts

Answer 5

debtor defaults and collateral is accounts, secured creditor can notify persons owing money to debtor to make payment to secured party instead of debtor. on notification, must pay secured creditor. payment to debtor will not discharge obligation

Question 6

retention of collateral

Answer 6

after default and repossession, secured party may propose retaining collateral. must send proposal to any other secured party from whom foreclosing party has received notice of claim to collateral and any other party who has perfected security interest by filing or notation on title. if notified party objects w/in 20 days, collateral must be disposed of by sale

secured party wishing to retain collateral must obtain debtor’s consent. debtor agrees by agreeing in authenticated record after default, or by failing to make authenticated objection w/in 20 days

Question 7

resale of collateral

Answer 7

sale may be public or private.

sale discharges foreclosing security interest and any subordinate interests - but item is still subject to superior interests

notice must be given in reasonable time (10 or more days before sale) to debtor, sureties, and secured parties who have given notice of interest or perfected by filing or making notation on title

for public sale, notice must have time and place of sale. for private sale, notice of time after which sale will occur must be given

sale must be commercially reasonable

secured party may buy at public sale - may buy at private sale only if collateral is of type customarily sold in recognized market or is of type subject to widely distributed standard price quotes

Question 8

proceeds of sale

Answer 8

money goes first to repay costs of repossession and sale. then to pay off debt of foreclosing creditor, then to pay off lower priority creditors. any money left goes to debtor

Question 9

deficiency judgment

Answer 9

party that is not fully satisfied can seek deficiency judgment from debtor

Question 10

right to redeem

Answer 10

any time before secured party has resold collateral or entered into contract for its disposition or obligation has been discharged by retention of collateral, debtor may redeem by tendering fulfillment of all obligations secured by the collateral. most agreements have acceleration clause, so will have to pay full balance