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Flashcards in Default Deck (16):

When is self-help by the lender permissible?

As long as the creditor does not breach the peace.


When does a breach of peace occur?

When the secured party's actions are likely to cause violence.


What constitutes a breach of peace per se?

1. Repossession despite a debtor's protest

2. Impersonation of law enforcement in order to repossess.


Can Secured Parties enter debtors' homes to repossess?

Not without voluntary and contemporaneous consent.


Can the Secured Party take possession of the debtor's property outside of the home?

As long as the debtor does not object.


What is required in order to foreclose on collateral?

Sending a written proposal to retain collateral in satisfaction of the debt.


To whom must the SP send a written proposal to foreclose when the collateral is consumer goods?

Debtor and secondary obligors.


To whom must the SP send a written proposal to foreclose when the collateral is non-consumer goods?

Debtor, other secured parties, and perfected creditors and secondary obligors.


What is the "pissant rule"?

If any notified party objects within 20 days after notice is sent, strict foreclosure is not allowed.


What is the 60% rule?

With consumer goods, if the debtor has paid 60% of the purchase price or more on the security, the SP cannot take the collateral. The SP must resell the collateral within a reasonable time of repossession.


What standard governs the resale of seized collateral by an SP?

The sale must be commercially reasonable.


When is a sale commercially reasonable?


1. With consumer goods, notice is sent to the debtor and secondary obligors

2. With all other types of goods, notice must be sent to the debtor and those secured parties who have advised the foreclosing creditor of their security interest, as well as perfected creditors and secondary obligors.


What must notice contain for the sale of consumer goods?

Time and place (if public), the time after which the sale will be made (if private), as well as how to calculate deficiency and how the debtor can redeem.


When must notice of sale be sent?

10 days or more before the time of the sale.


Can the foreclosing SP buy at the sale?

Yes if public

No if private


How can a debtor redeem?


1. Paying the accrued interest and creditor's reasonable expenses including attorney's fees

2. Before the collateral is resold or the time of strict foreclosure.