Question

TRUE OR FALSE PLEASE Cash from the sale of repossessed and sold collateral first goes to pay Select one: a. the expenses of repossessing, storing, and selling the collateral. b. the balance of the debt. c. reimbursing the debtor for repairing damage to his property when the creditor repossessed it, as long as the costs are reasonable.

Answer 1

b. the balance of the debt

Step-by-step explanation:

• Most of the time creditors repossess debtors' collateral for sale in an auction to redeem the amount of money taken by the debtor. When the sale of collateral does not cover the total balance of the money, the remaining balance is called deficiency balance.

• After the auction, cash from the sale of repossessed and sold collateral first goes to pay the amount/balance of the debt. The first thing that the creditor must do is to subtract the amount from the cash that the lender owes.

• Then the creditor may deduct the expenses of repossessing, storing, and selling the collateral.