§ 9-616 — Explanation of calculation of surplus or deficiency

(a) Definitions. In this Section: (1) "Explanation" means a record that: (A) states whether a surplus or deficiency is owed and the amount of the surplus, if applicable; (B) 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; (C) provides a telephone number or mailing address from which the debtor or consumer obligor may obtain additional information concerning the transaction and from which such person may request the amount of the deficiency and further information regarding how the secured party calculated the surplus or deficiency; and (D) at the sender's option, the information set forth in subsection (c). (2) "Request" means a record: (A) signed by a debtor or consumer obligor; (B) requesting that the recipient provide information of how it calculated the surplus or deficiency; and (C) sent after disposition of the collateral under Section 9-610. (b) 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 Section 9-615, the secured party shall: (1) send an explanation to the debtor or consumer obligor, as applicable, after the disposition and: (A) before or when the secured party accounts to the debtor and pays any surplus or first makes demand in a record on the consumer obligor after the disposition for payment of the deficiency, other than in instances in which such demand is made by a third-party debt collector covered by the Fair Debt Collection Practices Act; and (B) within 14 days after receipt of a request made by the debtor or consumer obligor within one year after the secured party has given an explanation under this Section or notice to such debtor or consumer obligor under Section 9-614 of this Article; or (2) 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. (c) Required information. To comply with subsection (a)(1)(B), an explanation must provide the following information in the following order: (1) 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: (A) 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 (B) 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; (2) the amount of proceeds of the disposition; (3) the aggregate amount of the obligations after deducting the amount of proceeds; (4) 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's fees secured by the collateral which are known to the secured party and relate to the current disposition; (5) 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 paragraph (1); and (6) the amount of the surplus or deficiency. (d) Substantial compliance. A particular phrasing of the explanation or response to a request is not required. An explanation or a response to a request complying substantially with the requirements of this Section is sufficient even if it is: (1) accompanied by or combined with other notifications; (2) includes information not specified by this Section; (3) includes minor errors that are not seriously misleading; or (4) includes errors in information not required by this Section. (e) Charges for responses. A debtor or consumer obligor is entitled without charge to one response to a request under this Section during any six-month period in which the secured party did not send to the debtor or consumer obligor an explanation pursuant to subsection (b)(1). The secured party may require payment of a charge not exceeding $25 for each additional response.

Legislative History

(Source: P.A. 103-1036, eff. 1-1-25 .)