default Flashcards
party has a right on default to
reduce a claim to judgment, foreclose, or otherwise enforce a claim.
or
repossess
Right to repossess tangible collateral
only repossess without breach of the peace
duty to not breach the peace
is a non-delegable duty
What must a secured party to if repossession cannot be made without breach of the peace?
bring an action for replevin.
Court will issue a writ of replevin
Sheriff can seize property for secured party
What can a secured party do after repossession?
sell, license or otherwise dispose of collateral in its present condition
or after a commercially reasonable preparation
all aspects of the sale must be commercially reasonable
Notice of Sale
must be provided to debtor and other secured parties
non-consumer transaction - 10 days notice prior to sale
consumer transactions- no set time
When is notice of sale not required
collateral is perishable
may decline quickly in value
typically sold on a recognized market
contents required of notice in non-consumer transaction
description of debtor collateral method of disposition statement debtor is entitled to an accounting of unpaid indebtedness time and place of public disposition
contents of notice in consumer goods transaction
description of any liability for a deficiency
Proceeds from sale - order of payment
reasonable expenses of sale
pay secured interests
debtor receives surplus
debtor is liable for deficiency
Commercially Unreasonable Sale
deficiency can be reduced by debtor in consumer transactions
Rebuttable Presumption Rule
Non-consumer transactions
allows reduction of deficiency balance by the difference between the outstanding amount and of the loan and amount collateral would have sold for in a commercially reasonable sale.
meaning deficiency is zero
How presumption can be rebutted?
party can show that collateral is worth less than outstanding debt owed and even if sale conducted in commercially reasonable manner, there would still be a deficiency.
