Default Flashcards
What are the 2 consequences of default?
The secured party may:
- Seek possession of the collateral and sell it or retain it; or
- Sue for a judgment based on the obligation
If an SI has priority in a fixture, can they remove the fixture in cases of default?
Yes
Is a secured party required to give notice of default or of an intent to take possession of collateral where there is a default?
No
What is the standard for disposition of collateral after default?
Disposition must be commercially reasonable
Is there a specific time requirement for disposition?
No
Can a disposition of collateral after default be by public or private sale?
Either or, but the secured party cannot purchase the collateral if it’s at a private sale
What 4 parties is a secured party required to give notice regarding the disposition of collateral after default?
- Debtor;
- Any second obligor;
- any other secured party or lien holder who has an SI perfected by filing; and
- any party who has notified the secured party of a claim or interest in the collateral.
When is a secured party required to give notice regarding the disposition of collateral after default?
At least 10 days before disposition
What are the 3 exceptions to notification of a disposition?
- Collateral is perishable or threatens to decline;
- collateral is of type customarily sold on a recognized market; or
- person has waived his right in authenticated writing
What is the order disbursement of cash proceeds received from disposition?
- First to reasonable disposition expenses;
- Then to satisfy subordinate SI’s; and
- Any remainder to the debtor.
Redemption of Collateral
Permits the redeemer to fulfill all obligations secured by the collateral and reasonable expense incurred by the secured party
When is redemption of collateral prohibited?
After disposition or foreclosure
Can redemption of collateral be waived?
Only after default and by an authenticated agreement
What are the 4 types of remedies for a secured party’s failure to comply?
- Injunctive relief;
- Actual damages;
- Consumer goods statutory damages; and
- Limitation on deficiency
What is Michigan’s statutory damages for consumer goods?
Debtor or secondary obligor may recover an amount not less than the credit service charge paid (plus 10%) OR the time-price differential paid (plus the 10%)
