Choice of remedies

     Upon default, the consensual secured creditor with a security interest in personal property or fixtures may foreclose on the collateral, sue on the underlying obligation, or do both in any order. The secured creditor is not required to elect one of these remedies to the exclusion of other.  See U.C.C. 9-601(a).  If the secured creditor first obtains a judgment on the underlying obligation, it may then attempt to enforce the judgment in the same manner as any other judgment creditor, such as through execution on any assets of the debtor, including but not limited to the assets subject to the security interest. See Commentary.Enforcement of Judgment. If the secured creditor obtains a money judgment and executes on the collateral that secured the debt, the execution is considered a form of foreclosure of the security interest and the execution lien relates back in time to the date on which the consensual security interest was perfected or the date on which a financing statement covering the collateral was filed, whichever first occurred.  See U.C.C. 9-601(e). If the creditor first forecloses on the collateral and sells the collateral for an amount insufficient to retire the debt, the creditor is generally entitled to recover the deficiency (the balance owing on the debt), by judgment and execution if necessary. By definition, unless additional collateral secures the debt, the deficiency is unsecured. We study elsewhere the circumstances under which the creditor's right to a deficiency may be limited or entirely precluded.

     Note that in a few jurisdictions the creditor secured by a deed of trust or mortgage on real property does not have the same options.  In California, for example, the consensual real property secured creditor must pursue the collateral first.  If the creditor sues first on the debt, the debtor may raise as an affirmative defense that the creditor has not yet foreclosed on the real property that secures the debt.