Chapter 409

409.620(1)(c) (c) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and

409.620(1)(d) (d) Subsection (5) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to s. 409.624.

409.620(2) (2) Purported acceptance ineffective. A purported or apparent acceptance of collateral under this section is ineffective unless:

409.620(2)(a) (a) The secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and

409.620(2)(b) (b) The conditions of sub. (1) are met.

409.620(3) (3) Debtor’s consent. For purposes of this section:

409.620(3)(a) (a) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default; and

409.620(3)(b) (b) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record authenticated after default or the secured party:

409.620(3)(b)1. 1. Sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained;

409.620(3)(b)2. 2. In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

409.620(3)(b)3. 3. Does not receive a notification of objection authenticated by the debtor within 20 days after the proposal is sent.

409.620(4) (4) Effectiveness of notification. To be effective under sub. (1) (b), a notification of objection must be received by the secured party:

409.620(4)(a) (a) In the case of a person to which the proposal was sent pursuant to s. 409.621, within 20 days after notification was sent to that person; and

409.620(4)(b) (b) In other cases:

409.620(4)(b)1. 1. Within 20 days after the last notification was sent pursuant to s. 409.621; or

409.620(4)(b)2. 2. If a notification was not sent, before the debtor consents to the acceptance under sub. (3).

409.620(5) (5) Mandatory disposition of consumer goods. A secured party that has taken possession of collateral shall dispose of the collateral pursuant to s. 409.610 within the time specified in sub. (6) if:

409.620(5)(a) (a) Sixty percent of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or

409.620(5)(b) (b) Sixty percent of the principal amount of the obligation secured has been paid in the case of a nonpurchase-money security interest in consumer goods.

409.620(6) (6) Compliance with mandatory disposition requirement. To comply with sub. (5), the secured party shall dispose of the collateral:

409.620(6)(a) (a) Within 90 days after taking possession; or

409.620(6)(b) (b) Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and authenticated after default.

409.620(7) (7) No partial satisfaction in consumer transaction. In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

409.620 History History: 2001 a. 10.

409.621 409.621 Notification of proposal to accept collateral.

409.621(1) (1) Persons to which proposal to be sent. A secured party that desires to accept collateral in full or partial satisfaction of the obligation it secures shall send its proposal to:

409.621(1)(a) (a) Any person from which the secured party has received, before the debtor consented to the acceptance, an authenticated notification of a claim of an interest in the collateral;

409.621(1)(b) (b) Any other secured party or lienholder that, 10 days before the debtor consented to the acceptance, held a security interest in or other lien on the collateral perfected by the filing of a financing statement that:

409.621(1)(b)1. 1. Identified the collateral;

409.621(1)(b)2. 2. Was indexed under the debtor’s name as of that date; and

409.621(1)(b)3. 3. Was filed in the office or offices in which to file a financing statement against the debtor covering the collateral as of that date; and

409.621(1)(c) (c) Any other secured party that, 10 days before the debtor consented to the acceptance, held a security interest in the collateral perfected by compliance with a statute, regulation, or treaty described in s. 409.311 (1).

409.621(2) (2) Proposal to be sent to secondary obligor in partial satisfaction. A secured party that desires to accept collateral in partial satisfaction of the obligation it secures shall send its proposal to any secondary obligor in addition to the persons described in sub. (1).

409.621 History History: 2001 a. 10.

409.622 409.622 Effect of acceptance of collateral.

409.622(1) (1) Effect of acceptance. A secured party’s acceptance of collateral in full or partial satisfaction of the obligation it secures:

409.622(1)(a) (a) Discharges the obligation to the extent consented to by the debtor;

409.622(1)(b) (b) Transfers to the secured party all of a debtor’s rights in the collateral;

409.622(1)(c) (c) Discharges the security interest or agricultural lien that is the subject of the debtor’s consent and any subordinate security interest or other subordinate lien; and

409.622(1)(d) (d) Terminates any other subordinate interest.

409.622(2) (2) Discharge of subordinate interest notwithstanding noncompliance. A subordinate interest is discharged or terminated under sub. (1), even if the secured party fails to comply with this chapter.

409.622 History History: 2001 a. 10.

409.623 409.623 Right to redeem collateral.

409.623(1) (1) Persons that may redeem. A debtor, any secondary obligor, or any other secured party or lienholder may redeem collateral.

409.623(2) (2) Requirements for redemption. To redeem collateral, a person shall tender:

409.623(2)(a) (a) Fulfillment of all obligations secured by the collateral; and

409.623(2)(b) (b) The reasonable expenses and attorney fees described in s. 409.615 (1) (a).

409.623(3) (3) When redemption may occur. A redemption may occur at any time before a secured party:

409.623(3)(a) (a) Has collected collateral under s. 409.607;

409.623(3)(b) (b) Has disposed of collateral or entered into a contract for its disposition under s. 409.610; or

409.623(3)(c) (c) Has accepted collateral in full or partial satisfaction of the obligation it secures under s. 409.622.

409.623 History History: 2001 a. 10.

409.624 409.624 Waiver.

409.624(1) (1) Waiver of disposition notification. A debtor or secondary obligor may waive the right to notification of disposition of collateral under s. 409.611 only by an agreement to that effect entered into and authenticated after default.

409.624(2) (2) Waiver of mandatory disposition. A debtor may waive the right to require disposition of collateral under s. 409.620 (5) only by an agreement to that effect entered into and authenticated after default.

409.624(3) (3) Waiver of redemption right. Except in a consumer-goods transaction, a debtor or secondary obligor may waive the right to redeem collateral under s. 409.623 only by an agreement to that effect entered into and authenticated after default.

409.624 History History: 2001 a. 10.

409.625 409.625 Remedies for secured party’s failure to comply with chapter.

409.625(1) (1) Judicial orders concerning noncompliance. If it is established that a secured party is not proceeding in accordance with this chapter, a court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms and conditions.

409.625(2) (2) Damages for noncompliance. Subject to subs. (3) and (4), a person is liable for damages in the amount of any loss caused by a failure to comply with this chapter. Loss caused by a failure to comply may include loss resulting from the debtor’s inability to obtain, or increased costs of, alternative financing.

409.625(3) (3) Persons entitled to recover damages; statutory damages if collateral is consumer goods. Except as otherwise provided in s. 409.628:

409.625(3)(a) (a) A person that, at the time of the failure, was a debtor, was an obligor, or held a security interest in or other lien on the collateral may recover damages under sub. (2) for its loss; and

409.625(3)(b) (b) If the collateral is consumer goods, a person that was a debtor or a secondary obligor at the time a secured party failed to comply with this subchapter may recover for that failure in any event an amount 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.

409.625(4) (4) Recovery when deficiency eliminated or reduced. A debtor whose deficiency is eliminated under s. 409.626 may recover damages for the loss of any surplus. However, a debtor or secondary obligor whose deficiency is eliminated or reduced under s. 409.626 may not otherwise recover under sub. (2) for noncompliance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance.

409.625(7) (7) Limitation of security interest: noncompliance with s. 409.210. If a secured party fails to comply with a request regarding a list of collateral or a statement of account under s. 409.210, the secured party may claim a security interest only as shown in the list or statement included in the request as against a person that is reasonably misled by the failure.

409.625 History History: 2001 a. 10; 2011 a. 206.

409.626 409.626 Action in which deficiency or surplus is in issue.

409.626(1) (1) Applicable rules if amount of deficiency or surplus in issue. In an action arising from a transaction, other than a consumer transaction, in which the amount of a deficiency or surplus is in issue, the following rules apply:

409.626(1)(a) (a) A secured party need not prove compliance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance unless the debtor or a secondary obligor places the secured party’s compliance in issue.

409.626(1)(b) (b) If the secured party’s compliance is placed in issue, the secured party has the burden of establishing that the collection, enforcement, disposition, or acceptance was conducted in accordance with this subchapter.

409.626(1)(c) (c) Except as otherwise provided in s. 409.628, if a secured party fails to prove that the collection, enforcement, disposition, or acceptance was conducted in accordance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance, the liability of a debtor or a secondary obligor for a deficiency is limited to an amount by which the sum of the secured obligation, expenses, and attorney fees exceeds the greater of:

409.626(1)(c)1. 1. The proceeds of the collection, enforcement, disposition, or acceptance; or

409.626(1)(c)2. 2. The amount of proceeds that would have been realized had the noncomplying secured party proceeded in accordance with the provisions of this subchapter relating to collection, enforcement, disposition, or acceptance.

409.626(1)(d) (d) For purposes of par. (c) 2., the amount of proceeds that would have been realized is equal to the sum of the secured obligation, expenses, and attorney fees unless the secured party proves that the amount is less than that sum.

409.626(1)(e) (e) If a deficiency or surplus is calculated under s. 409.615 (6), the debtor or obligor has the burden of establishing that the amount of proceeds of the disposition is significantly below the range of prices that a complying disposition to a person other than the secured party, a person related to the secured party, or a secondary obligor would have brought.

409.626(2) (2) Nonconsumer transactions; no inference. The limitation of the rules in sub. (1) to transactions other than consumer transactions is intended to leave to the court the determination of the proper rules in consumer transactions. The court may not infer from that limitation the nature of the proper rule in consumer transactions and may continue to apply established approaches.

409.626 History History: 2001 a. 10.

409.627 409.627 Determination of whether conduct was commercially reasonable.

409.627(1) (1) Greater amount obtainable under other circumstances; no preclusion of commercial reasonableness. The fact that a greater amount could have been obtained by a collection, enforcement, disposition, or acceptance at a different time or in a different method from that selected by the secured party is not of itself sufficient to preclude the secured party from establishing that the collection, enforcement, disposition, or acceptance was made in a commercially reasonable manner.

409.627(2) (2) Dispositions that are commercially reasonable. A disposition of collateral is made in a commercially reasonable manner if the disposition is made:

409.627(2)(a) (a) In the usual manner on any recognized market;

409.627(2)(b) (b) At the price current in any recognized market at the time of the disposition; or

409.627(2)(c) (c) Otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.

409.627(3) (3) Approval by court or on behalf of creditors. A collection, enforcement, disposition, or acceptance is commercially reasonable if it has been approved:

409.627(3)(a) (a) In a judicial proceeding;

409.627(3)(b) (b) By a bona fide creditors’ committee;

409.627(3)(c) (c) By a representative of creditors; or

409.627(3)(d) (d) By an assignee for the benefit of creditors.

409.627(4) (4) Approval under sub. (3) not necessary; absence of approval has no effect. Approval under sub. (3) need not be obtained, and lack of approval does not mean that the collection, enforcement, disposition, or acceptance is not commercially reasonable.