Self-Help: Repossessing and Selling a Debtor’s Collateral
Written by: Jocelyne Macelloni, Partner, Barakat + Bossa PLLC
In most every financing agreement, ‘Collateral’ is defined to encompass a wide array of assets securing the customer’s (debtor’s) obligations. Understanding your rights and options in the event of a default is critical for minimizing loss. Self-help is a right which is not often, but should be, used by creditors to quickly and efficiently minimize their losses following an event of default. So, what is “Self-Help?”
Why Choose Self-Help?
Self-Help repossession is often the easiest, fastest, and most cost-effective way to recover your money. Under Uniform Commercial Code (“UCC”) Section 9-609, creditors can enforce their security interest by repossessing collateral after a debtor defaults—without having to go to court.[i] Although it is recommended to engage an attorney to ensure that you strictly comply with the requirements of 9-609, Self-Help is, typically, the cheapest way to collect because you do not have to file a lawsuit and go through months, or even years, of litigation to recover what you are owed. As the name implies—as the creditor, you can help yourself to your collateral—so long as you do not breach the peace.
Understanding Your Collateral
The first step in the Self-Help process is identifying what property is specifically covered under your agreement and what property the customer actually has.[ii]
Start by clearly identifying the “Collateral” that is subject to Self-Help. There are two types of collateral—tangible and intangible. Tangible collateral are the physical things like equipment, inventory, real estate, vehicles, and furnishings. Intangible collateral are the things you cannot hold, but still carry value, such as intellectual property, stocks, trademarks, leases, or even airport landing rights.
The Repossession Process—Intangible Property
For intangible property, repossession can mean collecting payments from third parties, transferring ownership or taking control of the rights to an asset.[iii]
The most common intangible property that is repossessed after default is an account receivable. The repossession process for an account receivable can only occur after the debtor, who till this point could continue collecting payments from its customers, defaults. To employ Self-Help, the creditor need only notify the account debtors to redirect payments directly to the creditor.
Creditors can also typically seize intellectual property, domain names, trademarks, and license agreements. For example, you have financed a tech startup that secured its obligations with its intellectual property, including software licenses and associated customer subscription contracts as collateral. When the startup defaults on its repayment obligations, Self-Help can include executing an assignment of license rights, notifying the startup’s clients that the financier is now the holder of the licenses and that all subscription payments should be directed to them, lock out the customer’s administrative access to the license management system and begin managing the software accounts directly.
If you hold a deposit account, you may apply the balance of the deposit account to the outstanding obligation.[iv]
The Repossession Process—Tangible Property
For tangible property, repossession means physically taking possession of an item, disabling it, or disposing of it.[v] This might look like towing a car, shutting off equipment, or reclaiming appliances. In some cases, the agreement may require the debtor to gather the Collateral and hand it over, but most will simply ignore that request.[vi] If you suspect this will happen, asking might just give the debtor an opportunity to hide or move the property. Instead, you should expect to physically go to the debtor’s office, store, or warehouse with the intent of taking possession, transporting, storing, and preserving the property to maintain its value for resale.[vii]
The property must be handled with care to prevent damage. Opt for hiring professional movers, repossession agents, or industry specialists to handle the relocation. Additionally, repossession efforts must comply with state and federal regulations regarding transportation. Failing to follow proper procedures could result in fines, liability issues, or even further depreciation in the property’s value.[viii]
The most important rule: repossession, must not “breach the peace.”[ix] That means no breaking in, no threats, no yelling, and no actions that could provoke violence.[x] The specifics vary by state, but generally, you cannot show up in the middle of the night or use law enforcement to assist in the process. More subtle approaches—like reclaiming items from an unlocked area—are typically allowed.[xi]
After repossession, you must store the property in a secure location where it will be protected from theft, weather damage, and general deterioration.[xii] This often means placing repossessed property in climate-controlled warehouses, secured lots, or specialized storage facilities. If you fail to properly store and maintain repossessed property, it risks significant depreciation, which can not only directly impact the final resale price, but if found negligent in storing the property, the customer may even have grounds for legal action.[xiii]
By investing in proper transportation and secure storage, you can maximize the value of repossessed property, ensuring the best possible financial recovery while avoiding unnecessary legal and financial complications.
Selling Repossessed Collateral
Once collateral has been repossessed, it is typically sold to apply the cash proceeds to the outstanding obligation. The sale process has specific legal guidelines which must be complied with. Before selling, send a written notice to the customer, outlining the time and method of the sale.[xiv] This gives them a chance to either repurchase the collateral or at least be aware of what’s happening. However, in cases where the collateral is perishable, rapidly losing value, or sold on a recognized market, this notice requirement can be waived.[xv]
The sale must be conducted in a commercially reasonable manner, with the purpose of maximizing proceeds.[xvi] This means that you must consider:
The Price – The sale price does not have to match fair market value, but should not be so low that it raises legal concerns and scrutiny.[xvii]
The Manner of Sale – How the collateral is sold is generally up to you. Public sales are preferred as long as proper notice is given to the customer. Private sales can also work, but you should show proof of multiple offers, when possible, to avoid legal concerns and scrutiny.[xviii]
The Timing of Sale – Holding onto collateral for too long can be an issue, so the sale should happen within a reasonable timeframe and reasonable to the market that the collateral is to be sold in.[xix]
If the sale of the repossessed collateral meets all these criteria, the proceeds of the sale must then be applied to the outstanding obligation. You must account to your customer for any surplus, and the customer remains liable for any deficiency.[xx]
When Self-Help Isn’t an Option: Judicial Foreclosure
Sometimes, creditors may not be able to use self-help methods for repossession. In those cases, judicial foreclosure is an alternative. While this process is more expensive and time-consuming, it allows creditors more authority in their actions during the process of repossession and helps mitigate the risks of breaching the peace.
The process of judicial foreclosure varies by state, but in most cases, it begins when a secured creditor petitions the court to authorize a foreclosure sale after the debtor has been delinquent. The amount of time the debtor needs to be delinquent varies depending on the state and often is decided by the terms of the security agreement.[xxi] This legal action sets in motion a series of steps that ultimately determine whether the foreclosure will proceed uncontested or require litigation.
Once the creditor files the lawsuit, the debtor typically has 20 to 30 days to file a response with the court.[xxii] If the debtor fails to respond within this timeframe, the creditor can request a default judgment from the court. In most cases, courts will generally interpret a lack of response as an uncontested foreclosure, granting the default judgment and allowing the foreclosure sale to proceed.
If the debtor files a response and raises a legal defense, the case may proceed to trial. However, the creditor may file a motion for summary judgment, requesting the court to rule in its favor without a trial. The court will only grant this motion if there are no genuine issues of material fact, the debtor lacks a viable legal defense, or there has been no wrongdoing by the creditor. If the motion is denied, the creditor must prove that the debtor is in default under the terms of the security agreement and that the creditor has the right to foreclosure.[xxiii]
Once the court authorizes foreclosure, the sale must be publicly announced in accordance with state-specific laws. For instance, in Florida, the creditor must publish a notice of the foreclosure sale on a publicly accessible website for at least two weeks before the sale or publish the notice in a newspaper once a week for two consecutive weeks, with the second publication at least five days before the sale.[xxiv]
A court-appointed clerk typically oversees the foreclosure sale and collects a service charge at the time of the sale, as required by most state regulations. The winning bidder must make a deposit and pay the remaining balance by the end of the day. Failure to complete the payment results in the scheduling of a new sale, typically at least 20 days later. Upon full payment, the clerk issues a certificate of sale, and within 10 days, ownership is transferred to the buyer. Generally, debtors lose their right of redemption once the certificate of sale is issued[xxv]
Distribution of Judicial Foreclosure Sale Proceeds
Following the successful foreclosure sale, the clerk distributes proceeds according to the court judgment, applying funds typically in the following order[xxvi]:
1. Payment of foreclosure sale costs
2. Satisfaction of the secured creditor’s judgment
3. Payment to subordinate lienholders (in priority)
4. Disbursement of any surplus to the debtor
Other Legal Tools
Where Self-Help is not an option, a creditor can still take possession of Collateral through judicial process. Most states employ the following legal tools to do so:
Writ of attachment – A court order that allows for a secured creditor to seize property (before or after a judgment). Any property seized is held in the custody of a designated official, like a sheriff. Only tangible property can be attached.
Writ of replevin – A pre-judgment process that is used for tangible property. This court order allows the creditor to reclaim specific property, such as specific equipment subject to an equipment loan with identifiable serial numbers. Cars, boats, artwork, inventory, equipment, and other types of personal property are often subject to a writ of replevin.
Writ of garnishment – A court order used for intangible property. This court order allows the creditor to seize money or assets owed to the debtor by third parties. This can include garnishing a debtor’s wages or bank account funds.
These legal processes help creditors recover debts when non-judicial Self-Help is not an option.
The Bottom Line
In summary, secured creditors have several ways to recover debts owed when a borrower defaults. Self-Help repossession is often the quickest and least expensive option, but it must be handled carefully to avoid breaching the peace and legal scrutiny that may threaten the reasonableness of any sale. If non-judicial proceedings are not possible, judicial foreclosure offers a more structured approach, though it comes with added costs. By understanding both methods, creditors can navigate debt recovery efficiently while minimizing risks.
About the Authors:
Jocelyne A. Macelloni is a partner and director of education at Barakat + Bossa PLLC, located in Miami. Board-certified by the Florida Bar in business litigation, Macelloni has spent more than a decade representing businesses and business owners in courts and arbitrations around the U.S., including in cross-border transactions and disputes that involve enforcing factoring companies’ and secured creditors’ rights. Macelloni can be reached at jmacelloni@b2b.legal.
Mel C. Esposito is a J.D. candidate at the University of Florida with an expected graduation date of May 2026. She previously attended Emory & Henry College earning a B.A. in political science and history. Esposito can be reached at eesposito@b2b.legal.
[i] Uniform Commercial Code (UCC) § 9-609.
[ii] Determining what asserts will be subject to Self-Help should be a part of your underwriting process. Visiting offices and warehouses to monitor the inventory, equipment, and other Collateral ensures that your Collateral is there when you need it.
[iii] UCC §9-607(a)(1), (“a secured party (1) may notify an account debtor or other person obligated on collateral to make payment or otherwise render performance to or for the benefit of the secured party.”).
[iv] UCC §9-607(a)(4).
[v] UCC §9-609(a)(2).
[vi] UCC § 9-607(c).
[vii] Fla. Stat. § 679.2071.
[viii] Id.; see also Allen v. Coates, 661 So. 2d 879 (Fla. 1d DCA 1995) (“the secured party is under a duty of care to protect and preserve collateral and dispose of it in a manner likely to bring the full fair value.”).
[ix] UCC § 9-609(b)(2).
[x] See Rivera v. Dealer Funding, LLC, 178 F. Supp. 3d 272, 279 (E.D. Pa. 2016)(citing cases) (“courts consistently look to the following factors to determine if there was a breach of peace: the use of law enforcement; violence or threats of violence; trespass; verbal confrontation; and disturbance to third parties.”).
[xi] See generally Haverstick Enters v. Financial Fed. Credit, 32 F.3d 989 (6th Cir. 1994); In re pal Transportation, Inc., 13 B.R. 935 (Bankr. M.D. Fla. 1981); United States v. Coleman, 628 F.2d 961 (6th Cir. 1980).
[xii] I.d.; see also Florida First National Bank v. Martin, 449 So. 2d 861, 865 (Fla. 1st DCA 1984).
[xiii] See generally Southern Developers & Earthmoving Inc. v. Caterpillar Fin. Servs. Corp., 56 So. 3d 56 (Fla. 3d DCA 2011); Fla. Stat. § 679.608(1)(d); Weiner v. Am. Petrofina Mktg., Inc., 482 So. 2d 1362, 1364 (Fla. 1986).
[xiv] See Ford Motor Credit Co. v. Solway, 825 F.2d 1213 (7th Cir. 1987) (a secured party must provide reasonable notification of the time and place of a public sale or the time after which a private sale will occur).
[xv] See Chrysler Credit Corp. v. B.J.M., Jr., 834 F. Supp. 813,832 (E.D. Pa. 1993) (“unless collateral is perishable or threatens to decline speedily in value or is of a type of customarily sold on a recognized market, reasonable notification … shall be sent.”).
[xvi] See Garry M. Graber and Steven W. Wells, Hodgson Russ LLP, with Practical Law Bankruptcy, UCC Article 9 Secured Party Sales, 1758_UCC Article 9 Secured Party Sales _w-008-7326_.pdf
[xvii] See generally United States v. Willis, 593 F. 2d 247 (6th Cir. 1979); United States v. Tabor Court Realty Corp., 803 F.2d 1288 (3d Cir. 1986); Comfort Trane Air Conditioning Co. v. Trane Co., 592 F.2d 1373 (5th Cir. 1979) (Courts evaluate the totality of the aspects of the sale, including method, manner, time, place, and terms to determine reasonableness).
[xviii] Id.
[xix] Id.
[xx] UCC § 9-608(a)(4).
[xxi] See generally Fla. Stat. § 679.601 (allows a secured party to foreclose or otherwise enforce a claim after default, without specifying a minimum default period); NY Real Prop. Acts. Law §1304 (a debtor must be in default for at least 90 days before a judicial foreclosure action can be initiated); 12 C.F.R. § 1024.41(f)(1) (a foreclosure cannot be initiated until 120 after the borrower’s default for loans governed by federal regulations).
[xxii] See generally Fla. Stat. § 49.09 (giving 30 days); 735 ILCS 5/15-1602 (giving 90 days to submit to the court jurisdiction or to cure the default); O.C.G.A. § 44-14-232 (giving 7 days).
[xxiii] See U.S. Bank N.A. v. Engle, 311 So. 2d 197(Fla. 2d DCA 2020) (”to obtain a foreclosure judgment, the foreclosing lender must prove that t is entitled to enforce the promissory note, that the borrower defaulted under the terms, and that it properly accelerated the debt to maturity.”); see also Winchel v. PennyMac Corp., 222 So. 3d 639, 643 (Fla. 2d DCA 2017) (”once put at issue by a defendant, then, standing becomes part of the prima facie case that a foreclosure plaintiff must prove in order to secure a judgment.”).
[xxiv] Fla. Stat. § 45.031 (2025).
[xxv] Fla. Stat. § 45.0315 (the right to redemption may be exercised either by a redeeming owner or a redeeming junior lienholder at any time before the later of the filing of a certificate of sale by the clerk of court or at the time specified in the judgment).
[xxvi] Fla. Stat § 45.031; see Fla. R. Civ. P. Form 1.9969(a) Final Judgment of Foreclosure; Fla. Stat. § 45.032.