Article 9 — Secured Transactions · Section 9-507
This section addresses the rules regarding the debtor's rights in relation to collateral and the impact on the secured party's ability to collect on its security interest.
Source: U.C.C. § 9-507
If a security interest is perfected, a secured party has the right to proceed against the collateral without a waiting period, provided that they follow the proper procedures for repossession and disposition as outlined in this article.
UCC § 9-507 provides that when a debtor defaults on an obligation, a secured party can enforce their rights against the collateral without having to wait or seek additional court approval, as long as they comply with the provisions governing the repossession of the collateral.
A lender or entity that has a security interest in the collateral provided by the debtor.
Property or assets that are pledged by the debtor to secure a loan or obligation.
Example 1
A bank holds a perfected security interest in a borrower's car. When the borrower defaults on the loan, the bank can repossess the car without a court order.
Example 2
A furniture store sells a sofa on credit and retains a security interest in the sofa. If the buyer fails to make payments, the store can retrieve the sofa without additional legal procedures.