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Kansas Statutes Annotated

K.S.A. § 16a-5-109 (2026)

(UCCC) Default

✓ current as of May 2026
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16a-5-109. (UCCC) Default. An agreement of the parties to a consumer credit transaction with respect to default on the part of the consumer is enforceable only to the extent that:

(1) The consumer fails to make a payment as required by agreement; or

(2) the prospect of payment, performance, or realization of collateral is significantly impaired; the burden of establishing the prospect of significant impairment is on the creditor.

History: L. 1973, ch. 85, § 85; January 1, 1974.

KANSAS COMMENT, 2010

1. One of the vital terms of every consumer credit agreement is that which sets forth the criteria which will constitute default. By its nature "default" is not a term that is negotiated by the parties — it is generally controlled by the creditor. It is appropriate, therefore, that its content and implications be confined by the law so as to prevent abuse. This section is intended to accomplish that.

2. This section recognizes that there are two entirely distinct sets of circumstances which might constitute default on an installment obligation. The first and most common is the failure to pay an installment as required. A default of this type is susceptible of being cured by the consumer without impairing the continuing contractual relationship between the consumer and the creditor. See K.S.A. 16a-5-110. The second type of default relates to behavior of the consumer which endangers the prospect of a continuing relationship. It may be insolvency, illegal activity, or an impending removal of assets from the jurisdiction. There must, however, be circumstances present which significantly impair the relationship. Useful discussions of the types of factors and circumstances which constitute "significant impairment" can be found in Johnson County Auto Credit, Inc. v. Green, 277 Kan. 148, 83 P.2d 152 (2004); Prairie State Bank v. Hoefgen, 245 Kan. 236, 777 P.2d 811 (1989); and Medling v. Wecoe Credit Union, 234 Kan. 852, 678 P.2d 1115 (1984). The burden of proof is on the creditor to justify action on a claim of default of this type. This differs from the rule of UCC. See K.S.A. 84-1-208.

3. The "significant impairment" rule of subsection (2) prohibits so-called "insecurity clauses" under which default and acceleration can be called whenever the creditor in good faith feels "insecure." This also differs from the rule of UCC. See K.S.A. 84-1-208.

4. Under an administrative interpretation issued by the administrator, a demand or "call" feature may be included in non-real estate consumer loan agreements that are "interest only" — those in which the regularly scheduled payments are only of interest. See Administrative Interpretation No. 1001. This interpretation points out that calling for full payment in the middle of the regularly scheduled term (e.g., in the 30th month of a 48 month contract) would trigger the consumer's right to refinance the balloon payment under K.S.A. 16a-3-308.

Law Review and Bar Journal References:

Changes in repossession law under the UCCC discussed in "The New Kansas Consumer Legislation," Barkley Clark, 42 J.B.A.K. 147, 197 (1973).

"The New UCC Article 9 Amendments," Barkley Clark, 44 J.B.A.K. 131, 179 (1975).

"Summary Repossession, Replevin, and Foreclosure of Security Interests," Thomas V. Murray, 46 J.B.A.K. 93, 95 (1977).

"Commercial Transactions Under the New Bankruptcy Act," Paul B. Rasor, 48 J.B.A.K. 199, 215 (1979).

"Creditor Beware: From Default Through Deficiency Judgment," Wanda M. Temm, 60 J.K.B.A. No. 8, 17 (1991).

Attorney General's Opinions:

Definitions; supervised lender; supervised financial organization. 84-11.

CASE ANNOTATIONS

1. Debtor's conduct warranted creditor's conclusion that prospect for payment, performance or realization was significantly impaired; notice requirements inapplicable. Medling v. Wecoe Credit Union, 234 Kan. 852, 859, 860, 678 P.2d 1115 (1984).

2. Circumstances justifying determination of significant impairment examined. Prairie State Bank v. Hoefgen, 245 Kan. 236, 245, 777 P.2d 811 (1989).

3. Collateral is significantly impaired when debtor does not provide insurance upon vehicle; vehicle may be repossessed by creditor. Johnson County Auto Credit, Inc. v. Green, 31 Kan. App. 2d 250, 62 P.3d 680 (2003).

4. Repossession of vehicle invalid because of no significant impairment of appellant's collateral; $5,000 in attorney fees approved. Johnson County Auto Credit, Inc. v. Green, 277 Kan. 148, 83 P.3d 152 (2004).

5. Filing of bankruptcy not significant impairment of collateral under statute where debtor current on payments. In re Rowe, 342 B.R. 341, 350, 351 (2006).

6. Variety of factors may be considered to determine whether a significant impairment exists. Hall v. Ford Motor Credit Co., 292 Kan. 176, 254 P.3d 526 (2011).


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Notes of Decisions
Cited in 8 cases, 1984–2013 · leading case: Johnson Cnty. Auto Credit, Inc. v. Green, 83 P.3d 152 (Kan. 2004).
Sort: Relevance Newest Treatment
Johnson Cnty. Auto Credit, Inc. v. Green, 83 P.3d 152 (Kan. 2004). · cites it 19× “It essentially held that a borrower’s failure to insure a secured vehicle — as required by the terms of a consumer credit transaction — overrides all other facts and by itself constitutes significant impairment of the collateral as a matter of law under K.S.A. 16a-5-109. We…”
Prairie State Bank v. Hoefgen, 777 P.2d 811 (Kan. 1989). · cites it 8× “The Kansas comment to K.S.A. 16a-5-109 states: “Under prior Kansas law (UCC .”
Hall v. Ford Motor Credit Co. LLC, 254 P.3d 526 (Kan. 2011). · cites it 14× “In a July 2008 amendment to the petition, Hall added a claim that Ford Credit was in violation of the UCCC provision in K.S.A. 16a-5-109. Ford Credit filed answers and counterclaims to those claims, denying that Hall was entitled to relief and seeking a determination that Hall…”
In Re Steinhaus, 349 B.R. 694 (Bankr. D. Idaho 2006). · cites it 2× “at 350 (citing the Uniform Consumer Credit Code as adopted in that state, Kan. Stat. Ann. § 16a-5-109 (1995)). Rowe notes that Kansas state courts “narrowly defined ‘significant impairment’ ” and that the litigants there agreed it was unlikely a Kansas court would find…”
Medling v. Wecoe Credit Union, 678 P.2d 1115 (Kan. 1984). · cites it 3× “) K.S.A. 16a-5-109 statutorily defines and limits default for consumer credit transactions under the UCCC as follows: “An agreement of the parties to a consumer credit transaction with respect to default on the part of the consumer is enforceable only to the extent that “(1) the…”
In Re Rowe, 342 B.R. 341 (Bankr. D. Kan. 2006). “K.S.A. 16a-5-109 (1995). 31 . Johnson County Auto Credit, Inc.”
Johnson Cnty. Auto Credit, Inc. v. Green, 62 P.3d 680 (Kan. Ct. App. 2003). · cites it 6× “” K.S.A. 16a-5-109. *254 The trial court appears to have discounted the failure to maintain insurance factor because Auto Credit did not immediately move to seize the collateral when it became aware that the insurance had lapsed or to purchase coverage for the Greens’ van to…”
In re Henderson, 492 B.R. 537 (Bankr. D. Nev. 2013). “§ 28-45-107 (2012); Kan. Stat. Ann. § 16a-5-109 (2012); Me. Rev.”
— K.S.A. § 16a-5-109(1) — 1 case
Johnson Cnty. Auto Credit, Inc. v. Green, 62 P.3d 680 (Kan. Ct. App. 2003). “” K.S.A. 16a-5-109. *254 The trial court appears to have discounted the failure to maintain insurance factor because Auto Credit did not immediately move to seize the collateral when it became aware that the insurance had lapsed or to purchase coverage for the Greens’ van to…”
— K.S.A. § 16a-5-109(2) — 5 cases
Prairie State Bank v. Hoefgen, 777 P.2d 811 (Kan. 1989). “The Kansas comment to K.S.A. 16a-5-109 states: “Under prior Kansas law (UCC .”
Hall v. Ford Motor Credit Co. LLC, 254 P.3d 526 (Kan. 2011). “In a July 2008 amendment to the petition, Hall added a claim that Ford Credit was in violation of the UCCC provision in K.S.A. 16a-5-109. Ford Credit filed answers and counterclaims to those claims, denying that Hall was entitled to relief and seeking a determination that Hall…”
Johnson Cnty. Auto Credit, Inc. v. Green, 83 P.3d 152 (Kan. 2004). “It essentially held that a borrower’s failure to insure a secured vehicle — as required by the terms of a consumer credit transaction — overrides all other facts and by itself constitutes significant impairment of the collateral as a matter of law under K.S.A. 16a-5-109. We…”
Medling v. Wecoe Credit Union, 678 P.2d 1115 (Kan. 1984). “) K.S.A. 16a-5-109 statutorily defines and limits default for consumer credit transactions under the UCCC as follows: “An agreement of the parties to a consumer credit transaction with respect to default on the part of the consumer is enforceable only to the extent that “(1) the…”
Johnson Cnty. Auto Credit, Inc. v. Green, 62 P.3d 680 (Kan. Ct. App. 2003). “” K.S.A. 16a-5-109. *254 The trial court appears to have discounted the failure to maintain insurance factor because Auto Credit did not immediately move to seize the collateral when it became aware that the insurance had lapsed or to purchase coverage for the Greens’ van to…”
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