Default + Enforcement

Question 1

What are the types of Repossession?

Answer 1

1) Judicial Process

2) Self-help

Question 2

What is required for self-help repossession?

Answer 2

Cannot breach the peace

• a party breaches the peace when
  (i) the secured party brings police and they aren’t there b/c of a judicial order
  (ii) criminal act
  (iii) physical act

Question 3

What does not constitute a breach of the peace?

Answer 3

• trespass on land
• dead of night w/o confrontation
• circuit split of repossession in face of an oral protest
• large equipment can be rendered unusable in lieu of repossession

Question 4

After repossession, what may a secured party do?

Answer 4

• Sell the collateral subject to an article 9 disposition sale or accept the collateral

Question 5

How does an Article 9 disposition Sale happen?

Answer 5

• obligor is liable for any deficiency but receives any surplus from the sale
• Sale must be COMMERCIALLY REASONABLE
• low prices trigger increased scrutiny
• notice must be given to guarantors, or secured parties not required if sold on a public market or waived or if price is fixed.

Question 6

What must be in the contents of a notice of sale?

Answer 6

• names
• how when/where
• collateral
• statement that debtor can get accounting for unpaid indbtedness
• if consumer goods: describe liability for deficiency, phone number amount they would need to pay to redeem.

Question 7

How are proceeds from a sale allocated?

Answer 7

1) Reasonable Expenses
2) Debt
3) Subordinate Secrurity interest if they make a formal demand prior to disposition
4) Return to debtor or obligor for deficiency

• a Senior secured party will continue their security interest in the proceeds

Question 8

What is Strict Foreclosure?

Answer 8

accept collateral as satisfaction for the debt if:

1) Full Satisfaction and debtor consents in authenticated record
2) Acceptance by silence if no objection w/in 20 days

Question 9

For consumer goods what is the strict foreclosure requirement?

Answer 9

Can only accept collateral for full satisfaction and doesn’t apply if a portion of the debt has already been paid.

Question 10

Redemption

Answer 10

Debtor or secondary obligor may redeem by paying the total secured amount and expenses

• this must occur b4 of sale or acceptance
• can’t waive the right to redemption before a default