Chapter 409

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.

409.617(1) (1) Effects of disposition. A secured party’s disposition of collateral after default:

409.617(1)(a) (a) Transfers to a transferee for value all of the debtor’s rights in the collateral;

409.617(1)(b) (b) Discharges the security interest under which the disposition is made; and

409.617(1)(c) (c) Discharges any subordinate security interest or other subordinate lien.

409.617(2) (2) Rights of good-faith transferee. A transferee that acts in good faith takes free of the rights and interests described in sub. (1), even if the secured party fails to comply with this chapter or the requirements of any judicial proceeding.

409.617(3) (3) Rights of other transferee. If a transferee does not take free of the rights and interests described in sub. (1), the transferee takes the collateral subject to:

409.617(3)(a) (a) The debtor’s rights in the collateral;

409.617(3)(b) (b) The security interest or agricultural lien under which the disposition is made; and

409.617(3)(c) (c) Any other security interest or other lien.

409.617 History History: 2001 a. 10; 2003 a. 63.

409.618 409.618 Rights and duties of certain secondary obligors.

409.618(1) (1) Rights and duties of secondary obligor. A secondary obligor acquires the rights and becomes obligated to perform the duties of the secured party after the secondary obligor:

409.618(1)(a) (a) Receives an assignment of a secured obligation from the secured party;

409.618(1)(b) (b) Receives a transfer of collateral from the secured party and agrees to accept the rights and assume the duties of the secured party; or

409.618(1)(c) (c) Is subrogated to the rights of a secured party with respect to collateral.

409.618(2) (2) Effect of assignment, transfer, or subrogation. An assignment, transfer, or subrogation described in sub. (1):

409.618(2)(a) (a) Is not a disposition of collateral under s. 409.610; and

409.618(2)(b) (b) Relieves the secured party of further duties under this chapter.

409.618 History History: 2001 a. 10.

409.619 409.619 Transfer of record or legal title.

409.619(1) (1) Transfer statement. In this section, “transfer statement” means a record authenticated by a secured party stating:

409.619(1)(a) (a) That the debtor has defaulted in connection with an obligation secured by specified collateral;

409.619(1)(b) (b) That the secured party has exercised its postdefault remedies with respect to the collateral;

409.619(1)(c) (c) That, by reason of the exercise, a transferee has acquired the rights of the debtor in the collateral; and

409.619(1)(d) (d) The name and mailing address of the secured party, debtor, and transferee.

409.619(2) (2) Effect of transfer statement. A transfer statement entitles the transferee to the transfer of record of all rights of the debtor in the collateral specified in the statement in any official filing, recording, registration, or certificate-of-title system covering the collateral. If a transfer statement is presented with the applicable fee and request form to the official or office responsible for maintaining the system, the official or office shall:

409.619(2)(a) (a) Accept the transfer statement;

409.619(2)(b) (b) Promptly amend its records to reflect the transfer; and

409.619(2)(c) (c) If applicable, issue a new appropriate certificate of title in the name of the transferee.

409.619(3) (3) Transfer not a disposition; no relief of secured party’s duties. A transfer of the record or legal title to collateral to a secured party under sub. (2) or otherwise is not of itself a disposition of collateral under this chapter and does not of itself relieve the secured party of its duties under this chapter.

409.619 History History: 2001 a. 10.

409.620 409.620 Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.

409.620(1) (1) Conditions to acceptance in satisfaction. Except as otherwise provided in sub. (7), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

409.620(1)(a) (a) The debtor consents to the acceptance under sub. (3);

409.620(1)(b) (b) The secured party does not receive, within the time set forth in sub. (4), a notification of objection to the proposal authenticated by:

409.620(1)(b)1. 1. A person to which the secured party was required to send a proposal under s. 409.621; or

409.620(1)(b)2. 2. Any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal;

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.