When They Take The Car Back
U.C.C. § 9-609 — no breach of the peace, a commercially reasonable sale, and a signed notice before it
In New York, after a default, a secured party, such as the lender on a financed car, may take possession of the collateral. It may do so through judicial process, or without judicial process if it proceeds without breach of the peace.
A commercially reasonable sale. After default, the secured party may sell or otherwise dispose of the collateral, and every aspect of the disposition, including the method, manner, time, place and other terms, must be commercially reasonable.
A signed notice before it. A secured party that disposes of collateral sends the debtor and any secondary obligor a reasonable signed notification of disposition, unless the collateral is perishable, threatens to decline speedily in value, or is of a type customarily sold on a recognized market.
Getting it back. The debtor, a secondary obligor, or another secured party or lienholder may redeem the collateral by tendering fulfillment of all obligations it secures, with the reasonable expenses and attorney's fees of retaking and disposing of it, at any time before the secured party has disposed of it or contracted to.
The deficiency, and any surplus. The cash from the sale goes first to the reasonable expenses of retaking, holding, preparing and disposing of the collateral, and then to the debt it secures. The secured party accounts to the debtor for any surplus, and the obligor is liable for any deficiency.
How it was worked out. In a consumer-goods transaction, the secured party sends an explanation of how it calculated the surplus or deficiency, before or when it pays a surplus or first demands the deficiency in a record, and within fourteen days after receiving a signed request for one.
When the rules are not followed. A person is liable for damages for any loss caused by a failure to comply. If the collateral is consumer goods, a debtor or secondary obligor may recover in any event not less than the credit service charge plus 10 percent of the principal amount of the obligation, or the time-price differential plus 10 percent of the cash price.
| The assumption | What the law actually does |
|---|---|
| The assumptionThe repossession company can take the car any way it can | What the law actually doesOnly without breach of the peace, or else through judicial process |
| The assumptionOnce the car is taken, it is gone for good | What the law actually doesIt may be redeemed by paying everything it secures and the expenses, at any time before it is disposed of or contracted for |
| The assumptionThe sale price is whatever the lender gets | What the law actually doesEvery aspect of the sale must be commercially reasonable |
Leases, the contents a notice for consumer goods must carry, and the rules where a deficiency is reduced or eliminated are not all on this page. What a particular situation carries is a question for a licensed New York attorney.
Sources for this section (7)
- U.C.C. § 9-609 — Secured party's right to take possession after default
- U.C.C. § 9-610 — Disposition of collateral after default
- U.C.C. § 9-611 — Notification before disposition of collateral
- U.C.C. § 9-615 — Application of proceeds of disposition; liability for deficiency and right to surplus
- U.C.C. § 9-616 — Explanation of calculation of surplus or deficiency
- U.C.C. § 9-623 — Right to redeem collateral
- U.C.C. § 9-625 — Remedies for secured party's failure to comply
Legal information, not legal advice. Verified as of October 2026. Applying it to a particular situation is the work of a licensed New York attorney.