Default

Question 1

What is default?

Answer 1

When the debtor fails to repay a secured obligation (or some other event enumerated in the security agreement)

Question 2

Is perfection necessary for a secured party to seek a remedy upon default?

Answer 2

No, just attachment

Question 3

What are the secured party’s rights and remedies upon default?

Answer 3

(1) Repossession of tangible collateral
(2) Collection of intangible collateral
(3) Removal of fixtures from real property
(4) Render equipment unusable

Question 4

How may a secured party repossess collateral?

Answer 4

By physically taking it back without breaching the peace

Question 5

After repossessing collateral, may the secured party dispose of it?

Answer 5

Yes

Question 6

What are the requirements for proper disposition of repossessed collateral?

Answer 6

(1) Reasonable notice (unless perishable)
(2) Commercially reasonable disposition
(3) Proceeds of collection or sale

Question 7

What is strict foreclosure?

Answer 7

When a secured party retains collateral in full or partial satisfaction of the obligation

Question 8

What are a debtor’s rights and remedies?

Answer 8

(1) Redemption
(2) Injunction and damages
(3) Protection against creditor’s claim for deficiency if disposition was not commercially reasonable
(4) Common law rights and remedies