Secured
Transactions:
A secured transaction refers to " any transaction, regardless of its form, which is
intended to create a security interest in personal property or fixtures including goods,
documents, instruments, general intangibles, chattel paper, or accounts; and also to any
sale of accounts or chattel paper". (O.R.C. 1309-02.) A security interest is
generally created in a contract in which the description of the collateral is specified to
secured certain obligations.
When a debtor default on a secured obligation, the creditor generally has a right to take
possession of the collateral with judicial process, or without judicial process if the
taking can be done without breach of the peace. A debtor may redeem the collateral by
tendering full fulfillment of the secured obligation plus all expenses reasonably incurred
by the creditor prior to the sale of the collateral. (O.R.C. 1309.49.) If the debtor fails
to cure the default, the collateral may generally be disposed of in a commercially
reasonable manner in a public or private sale except for collaterals involving a consumer
transaction. (O.R.C. 1317.16.)
In a retail installment contract involving a consumer transaction, the creditor must give
the debtor a written notice, within five (5) days after taking possession of the
collateral, of the circumstances constituting the default and the terms for curing the
default. If the debtor fails to cure the default within twenty (20) days after the
creditor retakes possession of the collateral, or fifteen (15) days the giving of notice,
whichever is later, the secured creditor may dispose of the collateral by public sale only
after giving a notice of sale.
The required notice of public sale must be sent by certified mail, with
return receipt requested, at least ten days prior to the sale, and must contain specific
information such as the date, time and place of the sale, the minimum price for the
collateral, and a statement that the debtor may be held liable for any deficiency
resulting from the sale. In addition, at least ten (10) days prior to the sale, the
creditor must publish a notice of sale in a newspaper of general circulation in the county
where the sale is to be conducted. The notice of a debtor's right to cure default and
notice of sale may be combined in one.
If a creditor fails to give these notices, it may not be permitted to
recover the cost of retaking possession of the collateral and may not be entitled to a
deficiency judgment. (O.R.C. 1317.12.)
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