What may a secured party do if they experience a deficiency?

A secured party who experiences a deficiency after the disposition of collateral has the right to pursue the debtor for the remaining balance owed. This means if the secured party sells or otherwise disposes of collateral but does not recover the full amount of the outstanding debt, they can file a lawsuit against the debtor to recover that deficiency.

This process entails the secured party asserting a claim against the debtor for the unpaid balance, typically in accordance with the terms outlined in the security agreement and applicable state laws. The ability to pursue this legal action is crucial for secured parties, as it serves to protect their financial interests and allows them to seek recovery through the judicial system.

The other options do not adequately address the secured party's rights regarding a deficiency. Rescinding the security interest would negate the secured party's ability to claim any amount owed. Obtaining a new negotiation of the instrument, while a potential action under certain circumstances, does not directly relate to recovering a deficiency. Lastly, seeking only possession of collateral would not address any remaining balance still owed after the liquidation of assets.