What can a secured party do upon the debtor's default?

When a debtor defaults on a secured obligation, the secured party has several options available to them under the Uniform Commercial Code (UCC). The appropriate action includes the ability to dispose of the collateral, repossess it, or obtain a judgment for any deficiency following the disposition of the collateral.

Disposing of the collateral allows the secured party to recover the amount owed by selling or otherwise transferring the collateral to a third party. Repossession involves taking back the collateral from the debtor, which can be done without taking legal action if it can be done without breach of the peace. In the event that the proceeds from the sale of the collateral do not satisfy the debt fully, the secured party can pursue a deficiency judgment against the debtor for the remaining owed amount.

This combination of actions is crucial for the secured party to effectively mitigate their losses following a default, allowing for flexibility in dealing with the collateral and the outstanding debt. It emphasizes the rights secured parties have under the law to protect their interests in the collateral against default.