Default

Question 1

Self-Help

Answer 1

In the event of default, a secured party may take possession of the collateral by “self-help” if doing so would not cause a breach of the peace – any conduct that has the potential to lead to violence. This includes breaking and entering into a residence.

Question 2

Retaining collateral

Answer 2

After default, the secured party may retain the collateral in full or partial satisfaction of the debt if they send their proposal to 1) any other secured party with a claim they are notified of, and 2) any other secured party who has perfected the collateral by filing or noting on a certificate of title. They have 20 days to object. The debtor’s consent also must be obtained.

Question 3

Sale of collateral

Answer 3

A sale of collateral must provide notice to the debtor and all those with perfected security interests and it must be commercially reasonable, taking into account the sufficiency of the advertising, the market, the convenience of the sale, and the state of the collateral.

If the secured party fails to follow the requirements, there is a rebuttable presumption that the sale proceeds equal the amount of debt, even if there is a deficiency.