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Repossessions: 10.4.11.4 Method of Intended Disposition

Revised Article 9 requires that the creditor describe the method of disposition, for both consumer-goods transactions and other transactions.290 Because this requirement is incorporated into UCC § 9-614, which governs consumer-goods transactions, failure to include this information in the notice in a consumer-goods transaction renders the notice insufficient as a matter of law and entitles the consumer to UCC remedies.291 Describing the method of sale as an auction, without indicating whether it

Repossessions: 10.4.11.5 Entitlement to Accounting

Revised Article 9 adds a requirement, applicable both to consumer-goods transactions and other transactions, that the notice state that the debtor is entitled to an accounting of the unpaid indebtedness and the charge, if any, for such an accounting.298 The right to an accounting is set forth in UCC § 9-210(a)(2).

Repossessions: 10.4.11.7 Description of Recipient’s Liability for Deficiency

In consumer-goods transactions, revised Article 9 requires that the notice include “a description of any liability for a deficiency of the person to which the notification is sent.”324 The reference to “the person to which the notification is sent” appears to mean that the notice must be customized so that it states the liability of the particular recipient.

Repossessions: 10.4.11.8 Telephone Number to Learn Redemption Amount

Departing from the former version, revised Article 9 requires the notice of sale in a consumer-goods transaction to refer to the right to redeem the collateral.331 Revised Article 9 only requires that the notice state a telephone number from which the redemption amount is available.332 However, the model form also includes a shorthand description of the redemption right: “You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past due payme

Repossessions: 10.4.11.9 Telephone Number or Address for Additional Information

In consumer-goods transactions, the notice must include a telephone number or address from which the debtor can get additional information about the obligation and the disposition of the collateral.337 Check any telephone number provided to see if it actually is answered, as an incorrect telephone number will make the notice deficient as a matter of law.338 Colorado adopted a slightly different version of this requirement, mandating the provision of both an address and a telephone number rather

Repossessions: 10.4.11.10 Model Form

While the notice need not be in any particular form,340 revised Article 9 provides two “safe harbor” forms of notice: one for consumer-goods transactions341 and a scaled down version for all other transactions.342 These forms include language to meet Article 9’s notice requirements.

Repossessions: 10.4.11.12.2 Inclusion of additional non-required information that is misleading

Inaccuracies in non-required information that the creditor adds at the end of the notice will make the notice insufficient if the error is misleading with respect to rights arising under Article 9.361 Under this standard, misstatement of the time allowed for redemption of the collateral or of the redemption amount362 will invalidate a notice because these errors relate to the Article 9 right of redemption.

Repossessions: 10.4.12 Remedies for Notice Violations

When a secured party fails to give proper notice, UCC § 9-625 gives the debtor remedies, including actual damages,368 statutory damages, and injunctive relief.369 Actual damages may include any diminution in the sale price caused by the inadequate notice that reduced the number of potential bidders at the sale.370 The debtor may also recover consequential damages, subject to proof of causation and foreseeability.

Repossessions: 10.5.1 Unreasonable Delay

Under Article 9, creditors must sell repossessed consumer goods within ninety days if the debtor has already paid sixty percent of the cash price or loan principal.379 This requirement is substantively identical to that under the former version of Article 9, except that revised Article 9 allows any longer period to which the debtor and all secondary obligors have agreed. Such an agreement must be entered into and signed or otherwise authenticated after default.380

Repossessions: 10.6.2 Definitions

An official comment to Article 9 defines “public sale” as: “[O]ne at which the price is determined after the public has had a meaningful opportunity for competitive bidding.

Repossessions: 10.7.1 Creditor’s Choice of Manner of Sale Must Be Commercially Reasonable

Article 9 allows the creditor to choose the manner of selling the collateral, including the choice between a public sale or a private sale. However, the creditor’s choice must be commercially reasonable.435 Article 9 explicitly requires that the “method” and “manner” of disposition be commercially reasonable,436 and it authorizes “public or private proceedings” only “if commercially reasonable.”437

Repossessions: 10.7.4.1 Generally

Dealers and creditors frequently dispose of repossessed automobiles at auctions that are open only to automobile dealers and not to the public or the consumer debtor. These are wholesale auctions, as the buyers are dealers who intend to resell the vehicles at retail to the public. Because the auctions are designed to bring in a wholesale price, repossessed cars will often sell for less than half of their fair market value.467