 Secured Loan Default And Reposession
What happens if you default on a secured debt in Iowa?
A secured debt is one in which something of value has been used for collateral. In the case of a automobile loan, for instance, the automobile is the collateral. In other cases, a debtor may have used a paid in full car, his home, a boat, or other item of value as the collateral. A creditor is entitled to recover possession of collateral if you don't make scheduled payments on a secured debt. In obtaining possession of collateral, a creditor may do so without judicial process (reposession) if it can be done without breach of the peace or by judicial action.
After a debtor's default, a secured creditor may sell, lease or otherwise dispose of the collateral in a commercially reasonable manner. At any time before the disposition of the collateral, a debtor may have a right to redeem the collateral by tendering full payment of the amount owed and all reasonable expenses incurred by the creditor.
The disposition of the collateral may be conducted by public or private sale. Reasonable notice of the time and place of the sale is generally required to be given to other secured creditors and the debtor. A consumer generally may not be liable for a deficiency if the secured creditor fails to dispose of the repossessed collateral in a commercially reasonable manner.
A creditor must account to the debtor any amount in excess of what was owed that is gained in the disposition, and unless otherwise agreed, the debtor may be liable for any deficiency.
In a consumer credit transaction, the Iowa Consumer Credit Code Section 537.5110 requires that no attempt to enforce the obligation may be made until twenty days after a written notice of right to cure default is given to the consumer debtor. The notice of right to cure default must be in writing, and must contain specific information as prescribed under Iowa Code Section 537.5111. If a creditor fails to give this notice prior to filing an action for money judgment, its action will be dismissed. Violation of any provision of the Iowa Consumer Credit Code may subject a creditor to civil and criminal penalties and liabilities.
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