Absolute-Bar Rule Law and Legal Definition

Absolute bar rule is a principle which states that when a creditor sells collateral without giving reasonable notice to the debtor, the creditor may not obtain a deficiency judgment for any amount of the debt that is not satisfied by the sale. This rule has been adopted by many U.S. states.

The following are examples of case law discussing the rule:

According to the absolute bar rule, a secured creditor failing to comply with certain requirements of UCC, Article 9, including notice provisions, cannot sue for the deficiency owed after the sale of the collateral.[Hartt v. Flagship Credit Corp., 2010 U.S. Dist. LEXIS 68246 (E.D. Pa. July 7, 2010)]

Under absolute bar rule, a creditor who fails to dispose of collateral in a commercially reasonable manner is barred from obtaining a deficiency judgment.[City Nat'l Bank v. Unique Structures, 49 F.3d 1330, 1333 (8th Cir. Ark. 1995)]