Which remedies are commonly available after default on a secured loan or lease?

• A. Repossession or seizure of collateral, sale of collateral, application of proceeds to debt, acceleration of debt, possible deficiency claim, and litigation.
• B. Only monetary damages.
• C. Automatic renewal of loan terms.
• D. None; there are no remedies after default.

Answer: (A)

When a secured loan or lease defaults, the lender gains access to a specific set of remedies designed to recover what’s owed by the collateral. The most common path is to repossess or seize the collateral, then sell it in a commercially reasonable way. The proceeds from that sale are applied to the debt, and if there’s any remaining balance after the sale, the lender can continue to pursue that deficiency. At the same time, the lender can accelerate the debt, meaning the entire remaining balance becomes due immediately, and they may take legal action to collect what is owed. In practical terms, this combination—recovery of the collateral, sale, application of proceeds, potential deficiency claim, and possible litigation—is the typical route after default on a secured loan or lease.

Why the other options don’t fit: simply seeking monetary damages ignores the collateral-based remedies that govern secured transactions; automatic renewal of loan terms isn’t a remedy for default; and saying there are none is inaccurate because the secured creditor has documented remedies tied to the collateral and the debt.