Rights on Default

Question 1

Taking Possession and Sale

Answer 1

SP has a right to either 1) sue on the debt

2) for non-goods, to obtain payment directly from the person owing money to the debtor
3) to take possession of the collateral without breach of the peace, sell it publicly or privately and then sue to collect deficiency.

Question 2

Reasonableness of the sale

Answer 2

Best effort to obtain best price for collateral

1) sufficiency of advertising
2) limited market, was limited market contacted
3) did collateral need cleaning or repair
4) public auction time and place

Question 3

Sale Notice

Answer 3

Must give other SP’s notice of sale within a reasonable time..

Question 4

Retention of collateral in Satisfaction of Debt

Answer 4

If debtor has paid 60% on consumer goods then must dispose of the collateral within 90 days.
For non-comsumer goods, may retain the collateral as full satisfaction if 1) debtor consents or not object within 20 days after written notice 2) written notice of other SP’s with 20 days to object

Question 5

Debtors Right of Redemption

Answer 5

Until a sale or discharge of debt, debtor or other SP may redeem collateral by paying all obligations plus reasonable expenses.

Question 6

failure to comply with code requirements - Consumer goods

Answer 6

Court uses either

1) rebuttable presumption rule
2) absolute bar rule - no deficiency allowed
3) setoff rule - allow SP to recover deficiency minus actual damages to debtor

Question 7

failure to comply with code requirements - NON-Consumer goods

Answer 7

Rebuttable presumption rule - unless SP proves otherwise the value of the collateral is presumed to equal the amount of the debt.