Article 9 — Secured Transactions · Section 9-610
UCC § 9-610 outlines the right of secured parties to dispose of collateral after default.
Source: U.C.C. § 9-610
After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its possession or control. The disposition may be at public or private sale, and it must be commercially reasonable.
UCC § 9-610 allows a secured party to sell or dispose of collateral after the debtor defaults on their obligations. The manner of disposal must be commercially reasonable, which means it should be conducted in a fair and appropriate way under the circumstances.
A person or entity that holds a security interest in collateral to secure payment or performance of an obligation.
Property pledged as security for a debt or obligation.
Example 1
If a borrower fails to make payments on a secured loan for a vehicle, the lender may repossess the vehicle and sell it to cover the outstanding debt.
Example 2
A company that provided equipment on credit may sell the equipment after the customer defaults on payment.