Attorney Deanne Koll explains what notices need to be sent before a lender can dispose of repossessed collateral.
Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.
After default on a secured loan, the lender often ends up with the collateral in its possession and wants to dispose of it. There are specific notices a lender must send to the defaulted borrower before it disposes of the collateral.
In Wisconsin, the law requires a lender to provide reasonable notice to the borrower (and any secondary obligors or subordinate lienholders) prior to disposing of collateral.
The timing of the notice—or what constitutes “reasonable notice”—is a question of fact. Meaning, there are no specifics. However, in a non-consumer transaction, a 10-day notice period is presumed to be reasonable notice prior to disposition.
So, what has to go into the actual notice? The notice must provide for a description of the lender, a description of the collateral to be sold, the method of intended disposition, the borrower’s entitlement of an accounting of the proceeds and the time and place of the sale.
There are specific form notices directly in the Wisconsin Statutes available for lenders. You should also note that the specifics of the requirements within the notice depend on whether the goods to be disposed of result from a consumer or non-consumer transaction.
If you are not familiar with the rules of disposition of secured collateral or do not have appropriate procedures in place for this, you should consult with an attorney.