Michigan Collections Manager License Practice Test

Which of the following rights must be stated in the notice of disposition?

1. The liability for deficiency

2. The right to challenge the lien

3. The right to receive alternative pay methods

4. The right to contest the sale price

The correct answer is: The liability for deficiency

The correct answer is focused on the requirement to inform the debtor about liability for deficiency in the notice of disposition. In the context of collections and secured transactions, it is crucial for debtors to be aware of their financial responsibilities after the disposition of collateral. In cases where the sale of collateral does not cover the full amount of the debt, the debtor may be liable for the deficiency. Therefore, clearly stating this liability in the notice ensures that debtors are fully informed and aware of their obligations, which is a fundamental component of transparency in collections practices. The other choices reflect rights and considerations that may be relevant in the collections process, but they do not necessarily need to be disclosed in the notice of disposition. For example, the right to challenge the lien or to receive alternative payment methods, while significant, are separate from the immediate need to inform the debtor about deficiencies arising from the collateral sale. Similarly, the right to contest the sale price is not a mandatory disclosure in this context; the focus remains on the implications of the sale concerning the debtor’s financial obligations. Thus, liability for deficiency is the critical aspect that must be communicated in the notice to ensure debtors understand their potential liabilities following the disposition of collateral.