Chapter 409

We will sell [or lease or license, as applicable] the .... [describe collateral] privately sometime after .... [day and date].

You are entitled to an accounting of the unpaid indebtedness secured by the property that we intend to sell [or lease or license, as applicable] [for a charge of $ .... ]. You may request an accounting by calling us at .... [telephone number].

409.613 History History: 2001 a. 10.

409.614 409.614 Contents and form of notification before disposition of collateral: consumer-goods transaction. In a consumer-goods transaction, the following rules apply:

409.614(1) (1) Notification of disposition. A notification of disposition must provide the following information:

409.614(1)(a) (a) The information specified in s. 409.613 (1);

409.614(1)(b) (b) A description of any liability for a deficiency of the person to which the notification is sent;

409.614(1)(c) (c) A telephone number from which the amount that must be paid to the secured party to redeem the collateral under s. 409.623 is available; and

409.614(1)(d) (d) A telephone number or mailing address from which additional information concerning the disposition and the obligation secured is available.

409.614(2) (2) Substantial compliance. A particular phrasing of the notification is not required.

409.614(3) (3) Notification: form sufficient. The following form of notification, when completed, provides sufficient information:

[Name and address of secured party] ....

[Date] ....

NOTICE OF OUR PLAN TO SELL PROPERTY

.... [Name and address of any obligor who is also a debtor]

Subject: .... [Identification of transaction]

We have your .... [describe collateral], because you broke promises in our agreement.

[For a public disposition]:

We will sell .... [describe collateral] at public sale. A sale could include a lease or license. The sale will be held as follows:

Date: ....

Time: ....

Place: ....

You may attend the sale and bring bidders if you want.

[For a private disposition]:

We will sell .... [describe collateral] at private sale sometime after .... [date]. A sale could include a lease or license.

The money that we get from the sale (after paying our costs) will reduce the amount you owe. If we get less money than you owe, you .... [will or will not, as applicable] still owe us the difference. If we get more money than you owe, you will get the extra money, unless we must pay it to someone else.

You can get the property back at any time before we sell it by paying us the full amount you owe (not just the past-due payments), including our expenses. To learn the exact amount you must pay, call us at .... [telephone number].

If you want us to explain to you in writing how we have figured the amount that you owe us, you may call us at .... [telephone number] [or write us at .... [secured party’s address]] and request a written explanation. [We will charge you $.... for the explanation if we sent you another written explanation of the amount you owe us within the last 6 months.]

If you need more information about the sale, call us at .... [telephone number]] [or write us at .... [secured party’s address]].

We are sending this notice to the following other people who have an interest in .... [describe collateral] or who owe money under your agreement:

.... [Names of all other debtors and obligors, if any]

[End of Form]

409.614(4) (4) Notification: other information. A notification in the form of sub. (3) is sufficient, even if additional information appears at the end of the form.

409.614(5) (5) Notification: errors. A notification in the form of sub. (3) is sufficient, even if it includes errors in information not required by sub. (1), unless the error is misleading with respect to rights arising under this chapter.

409.614(6) (6) Notification: not in form. If a notification under this section is not in the form of sub. (3), law other than this chapter determines the effect of including information not required by sub. (1).

409.614 History History: 2001 a. 10.

409.615 409.615 Application of proceeds of disposition; liability for deficiency and right to surplus.

409.615(1) (1) Application of proceeds. A secured party shall apply or pay over for application the cash proceeds of disposition under s. 409.610 in the following order to:

409.615(1)(a) (a) The reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing of, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney fees and legal expenses incurred by the secured party;

409.615(1)(b) (b) The satisfaction of obligations secured by the security interest or agricultural lien under which the disposition is made;

409.615(1)(c) (c) The satisfaction of obligations secured by any subordinate security interest in or other subordinate lien on the collateral if:

409.615(1)(c)1. 1. The secured party receives from the holder of the subordinate security interest or other lien an authenticated demand for proceeds before distribution of the proceeds is completed; and

409.615(1)(c)2. 2. In a case in which a consignor has an interest in the collateral, the subordinate security interest or other lien is senior to the interest of the consignor; and

409.615(1)(d) (d) A secured party that is a consignor of the collateral if the secured party receives from the consignor an authenticated demand for proceeds before distribution of the proceeds is completed.

409.615(2) (2) Proof of subordinate interest. If requested by a secured party, a holder of a subordinate security interest or other lien shall furnish reasonable proof of the interest or lien within a reasonable time. Unless the holder does so, the secured party need not comply with the holder’s demand under sub. (1) (c).

409.615(3) (3) Application of noncash proceeds. A secured party need not apply or pay over for application noncash proceeds of disposition under s. 409.610 unless the failure to do so would be commercially unreasonable. A secured party that applies or pays over for application noncash proceeds shall do so in a commercially reasonable manner.

409.615(4) (4) Surplus or deficiency if obligation secured. If the security interest under which a disposition is made secures payment or performance of an obligation, after making the payments and applications required by sub. (1) and permitted by sub. (3):

409.615(4)(a) (a) Unless sub. (1) (d) requires the secured party to apply or pay over cash proceeds to a consignor, the secured party shall account to and pay a debtor for any surplus; and

409.615(4)(b) (b) The obligor is liable for any deficiency.

409.615(5) (5) No surplus or deficiency in sales of certain rights to payment. If the underlying transaction is a sale of accounts, chattel paper, payment intangibles, or promissory notes:

409.615(5)(a) (a) The debtor is not entitled to any surplus; and

409.615(5)(b) (b) The obligor is not liable for any deficiency.

409.615(6) (6) Calculation of surplus or deficiency in disposition to person related to secured party. The surplus or deficiency following a disposition is calculated based on the amount of proceeds that would have been realized in a disposition complying with this subchapter to a transferee other than the secured party, a person related to the secured party or a secondary obligor if:

409.615(6)(a) (a) The transferee in the disposition is the secured party, a person related to the secured party, or a secondary obligor; and

409.615(6)(b) (b) The amount of proceeds of the disposition is significantly below the range of proceeds 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.

409.615(7) (7) Cash proceeds received by junior secured party. A secured party that receives cash proceeds of a disposition in good faith and without knowledge that the receipt violates the rights of the holder of a security interest or other lien that is not subordinate to the security interest or agricultural lien under which the disposition is made:

409.615(7)(a) (a) Takes the cash proceeds free of the security interest or other lien;

409.615(7)(b) (b) Is not obligated to apply the proceeds of the disposition to the satisfaction of obligations secured by the security interest or other lien; and

409.615(7)(c) (c) Is not obligated to account to or pay the holder of the security interest or other lien for any surplus.

409.615 History History: 2001 a. 10.

409.616 409.616 Explanation of calculation of surplus or deficiency.

409.616(1) (1) Definitions. In this section:

409.616(1)(a) (a) “Explanation” means a writing that:

409.616(1)(a)1. 1. States the amount of the surplus or deficiency;

409.616(1)(a)2. 2. Provides an explanation in accordance with sub. (3) of how the secured party calculated the surplus or deficiency;

409.616(1)(a)3. 3. States, if applicable, that future debits, credits, charges, including additional credit service charges or interest, rebates, and expenses may affect the amount of the surplus or deficiency; and

409.616(1)(a)4. 4. Provides a telephone number or mailing address from which additional information concerning the transaction is available.

409.616(1)(b) (b) “Request” means a record:

409.616(1)(b)1. 1. Authenticated by a debtor or consumer obligor;

409.616(1)(b)2. 2. Requesting that the recipient provide an explanation; and

409.616(1)(b)3. 3. Sent after disposition of the collateral under s. 409.610.

409.616(2) (2) Explanation of calculation. In a consumer-goods transaction in which the debtor is entitled to a surplus or a consumer obligor is liable for a deficiency under s. 409.615, the secured party shall:

409.616(2)(a) (a) Send an explanation to the debtor or consumer obligor, as applicable, after the disposition and:

409.616(2)(a)1. 1. Before or when the secured party accounts to the debtor and pays any surplus or first makes written demand on the consumer obligor after the disposition for payment of the deficiency; and

409.616(2)(a)2. 2. Within 14 days after receipt of a request; or

409.616(2)(b) (b) In the case of a consumer obligor who is liable for a deficiency, within 14 days after receipt of a request, send to the consumer obligor a record waiving the secured party’s right to a deficiency.

409.616(3) (3) Required information. To comply with sub. (1) (a) 2., a writing must provide the following information in the following order:

409.616(3)(a) (a) The aggregate amount of obligations secured by the security interest under which the disposition was made, and, if the amount reflects a rebate of unearned interest or credit service charge, an indication of that fact, calculated as of a specified date:

409.616(3)(a)1. 1. If the secured party takes or receives possession of the collateral after default, not more than 35 days before the secured party takes or receives possession; or

409.616(3)(a)2. 2. If the secured party takes or receives possession of the collateral before default or does not take possession of the collateral, not more than 35 days before the disposition;

409.616(3)(b) (b) The amount of proceeds of the disposition;

409.616(3)(c) (c) The aggregate amount of the obligations after deducting the amount of proceeds;

409.616(3)(d) (d) The amount, in the aggregate or by type, and types of expenses, including expenses of retaking, holding, preparing for disposition, processing, and disposing of the collateral, and attorney fees secured by the collateral which are known to the secured party and relate to the current disposition;

409.616(3)(e) (e) The amount, in the aggregate or by type, and types of credits, including rebates of interest or credit service charges, to which the obligor is known to be entitled and which are not reflected in the amount in par. (a); and

409.616(3)(f) (f) The amount of the surplus or deficiency.

409.616(4) (4) Substantial compliance. A particular phrasing of the explanation is not required. An explanation complying substantially with the requirements of sub. (1) is sufficient, even if it includes minor errors that are not seriously misleading.

409.616(5) (5) Charges for responses. A debtor or consumer obligor is entitled without charge to one response to a request under this section during any 6-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to sub. (2) (a). The secured party may require payment of a charge not exceeding $25 for each additional response.

409.616 History History: 2001 a. 10.

409.617 409.617 Rights of transferee of collateral.