Michigan Collections Manager License Practice Test

What right does a debtor have concerning the amount derived after disposition?

1. The right to demand compensation

2. The right to request an explanation of how the amount was derived

3. The right to contest the secured party's claim

4. The right to receive surplus funds immediately

The correct answer is: The right to request an explanation of how the amount was derived

A debtor has the right to request an explanation of how the amount was derived after the disposition of collateral. This right is important because it promotes transparency in the debt collection process. When collateral is sold or disposed of to satisfy a debt, the debtor is entitled to understand the calculations involved in determining the net proceeds from that sale. This includes how much was received from the sale, any costs associated with the sale, and how the remaining amounts were applied to the original debt. This right helps to ensure that the secured party has properly accounted for all elements related to the disposition and has treated the debtor fairly. Understanding the derivation of the amount aids the debtor in determining whether the secured party is acting within legal parameters and provides the opportunity to assess whether any discrepancies exist that could lead to further disputes or claims. Other options, while they may seem reasonable, do not capture the specific entitlement granted to a debtor in this context. The right to demand compensation or to contest claims does not focus directly on the transparency of the amount derived, which is the core of the question. Similarly, while a debtor may have a right to receive surplus funds, the immediate nature of that right is not universally guaranteed, as circumstances may dictate the timing of such payments. Thus, the