Secured Debt Comes With Special Obligations
Many lenders take a security interest in an asset. Examples of these loans include auto loans, business loans and mortgages. Keep in mind that there are different obligations for consumers and commercial secured debt. The item is pledged to the lender with a security interest and the asset can be repossessed if the borrower fails to make payments. The lender can sell the repossessed collateral and apply the payment toward the loan. Granting a security interest is the norm for loans such as auto loans, business loans and mortgages; these are called secured loans.
A secured creditor may reduce its claim to judgment and foreclose, or otherwise enforce the security interest by any other available procedures permitted by law. It does not need to choose one remedy. “A secured creditor need not first repossess and dispose of collateral before obtaining judgment and executing upon other assets of the debtor.” Article 9 of the Uniform Commercial Code (“UCC”), R.C. §§ 1309.102-1309.709.
It is important to keep in mind that a security interest is a great tool for creditors, but repossessions and foreclosures can be complicated and expensive. A creditor should consult with a qualified attorney who is experienced before taking a security interest in property and considering all options. Delev & Associates has relevant experience with repossessions and foreclosures. Call or complete our online contact form.