default

Question 1

default

Answer 1

upon default, secured party may take possession of collateral without judicial process or collect via authenticated notification

Question 2

reclaiming possession

Answer 2

reclaiming possession through self-help is allowed as long as no breach of the peace occurs

Question 3

example of collection rights

Answer 3

A loans B 10k, for which A gets a promissory note

A takes out a loan from C for 5k, using B’s promissory note as collateral

A defaults on C’s loan

C may notify B of A’s default and rquire that B pay C on the promissory note

Question 4

post-default disposition of collateral by secured party

Answer 4

• upon default, a secured party can dispose of collateral (sell, lease) as long as it is done in a commercially reasonable way

Question 5

strict foreclosure

Answer 5

upon default, foreclosing party may keep collateral to fully/partially satisfy the debt

Question 6

requirements of strict foreclosure

Answer 6

• debtor must consent
• secured party must sent notice of intent to keep the collateral
• if a notified party objects, collateral must be disposed of through sale

Question 7

strict foreclosure and consumer transactions EXCEPTION

Answer 7

secured party may not keep collateral in partial satisfcation of debt, then seek deficiency judgment for remaining unpaid price

Question 8

strict foreclosure and consumer goods EXCEPTION

Answer 8

where debtor has paid at least 60% of a PMSI or loan, secured party must sell collateral within 90 days after repossession