Difference between revisions of "Creditors' Remedies against Debtors (10:III)"

Section 17 of the PPSA imposes a standard of reasonable care on any secured party in possession of the collateral. e)Rights of a Debtor The PPSA preserves the debtor’ s  (but not the secured party’ s) rights and remedies under other statutes that are not inconsistent with the  PPSA as well as the specific rights and remedies provided in the security agreement, ss 17 and 56(2)(b). f)Rights of Redemption and Reinstatement Under s 62, a debtor has redemption rights. Any person entitled to notice of a pending disposition of collateral may “redeem” the collateral  by tendering to the secured party fulfilment of the obligations secured by the collateral plus the reasonable expenses incurred by the secured  party associated in seizing the collateral or otherwise preparing it for disposition. The aforementioned obligations may simply be the amount  in arrears; however, it is more often the case that an acceleration clause applies, and that the obligations will be the total amount of the debt. Where the security agreement contains an acceleration clause, the debtor may apply to court for relief from the consequences of default  or for an order staying enforcement of the security agreement’ s acceleration provision. Where the collateral is a “consumer good”, the calculation of the obligation secured and the obligation that must be tendered is varied. The debtor may “reinstate” the security agreement by paying only the monies actually in arrears – negating the operation of any acceleration clause. The debtor may waive this right but any such agreement must be in writing after default. Note that the number of times the debtor may  reinstate the security agreement is limited depending on the period of time for repayment set out in the security agreement; however, the  frequency of reinstatement may be varied by agreement between the parties.  1 2.Consumer Goods a)Secured Party’s Remedies Section 67(1) lists the options available to a secured party. The secured party may elect to pursue one of the following remedies:seize or repossess the goods (s 58);  enact the voluntary foreclosure remedy (s 61) (discussedabove); accept the surrender of the goods by the debtor; or start an action to recover a judgment against the debtor for the amount of the unpaid debt or unperformed obligations under the security agreement. This is sometimes called the “seize or sue” rule. If the debtor has paid at least two-thirds of the total amount of the secured obligation, the secured party may not seize the consumer good  used as collateral (s 58(3)). However, the secured party may apply to court for an order that the “two-thirds rule” should not apply and the court will make a decision based on (s 58(4), (5)):  the value of the collateral; the amount of the obligation that has been discharged;