DEFAULT & REPOSSESSION Flashcards
Events causing default
Default & Repossession
The making of any false or misleading statements
The collateral being lost, stolen, damaged, or destroyed
The failure of the debtor to keep the collateral insured and in good repair
A grant by the debtor of a security interest in the same collateral to any other party
Any levy upon or seizure of the collateral
Failure of the debtor to notify the secured party of any change of name, change in location of the debtor, and so on
A disposition of any or all of the collateral in a manner not authorized
Failure of the debtor to properly inform the secured party or account for any proceeds of an authorized disposition of the collateral s it has agreed to
Death, dissolution, termination of existence, reorganization, insolvency, or business failure of the debtors
General Insecurity Clause
Default & Repossession
Provides for default if there is a circumstance that impairs the value of the collateral or imperils the prospect of repayment
Acceleration Clause
Default & Repossession
Provides that in some or all instances of default, the entire amount owed to the secured party becomes due immediately.
When may a secured party invoke an acceleration clause
Default & Repossession
Only if that party in good faith believes the prospect of payment or performance is impaired. The burden of establishing lack of good faith is on the party against which the power has been exercised.
What judicial remedies are available to a secured party after default
Default & Repossession
A secured party:
May reduce a claim to judgment, foreclose, or otherwise enforce the claim, security interest, or agricultural lien by any available judicial procedure; and
If the collateral is documents, may proceed either as to the documents or as to the goods they cover.
What non-judicial remedies may a secured party exercise after default
Default & Repossession
After default, a secured party:
May take possession of the collateral; and
Without removal, may render equipment unusable and dispose of collateral on a debtor’s premises.
What limitation is put on repossession by secured party
Default & Repossession
The secured party may only proceed without breach of the peace (by either party)
