Which party typically holds the right to enforce a security interest when default occurs?

• A. The lender.
• B. The borrower.
• C. The court.
• D. A third-party guarantor.

Answer: (A)

When a loan is secured, the lender becomes the secured party, and upon default the secured party is the one who enforces the security interest. This typically means the lender can take possession of the collateral (often through self-help if allowed by law and not causing a breach of the peace), then sell or otherwise dispose of it and apply the proceeds to what is owed. If the sale yields more than the debt, any excess goes to the debtor; if it yields less, the lender may pursue a deficiency judgment. The borrower does not have the enforcement rights over the collateral themselves, and a guarantor’s obligation is to pay, not to enforce the security interest. The court only steps in if the enforcement process requires judicial action or if disputes arise.