Updated . Educational only — not tax, legal, or lending advice. Confirm figures with your CPA, the state revenue department, and a lender before you close.
After Default: Notice, the Airplane, and the Deficiency
Default is a contract event. Repossession is what the lender does with the collateral after that event. The lender’s first calls are covered on what lenders do first. This page is the sequence after they decide to take the aircraft.
The security interest is already on file
A purchase-money aircraft loan is secured by the airframe, engines, propellers, and logbooks, and the lender’s interest is recorded with the FAA. The borrower does not have to “agree to repossession” at the end. The agreement they signed at closing already covers it. Hiding the aircraft, stripping the panel, or withholding logbooks makes the deficiency and the lawsuit worse. It does not unwind the lien.
A typical sequence
- Default notice and a chance to cure, if the note gives one. Not every note gives a long cure.
- Insurance notice. A grounded, uninsured aircraft is a problem for both sides. Keep the policy in force while you negotiate.
- Taking possession, often by ferry under the lender’s crew and insurance, to a shop or a broker.
- A sale. The net proceeds, after ferry, repair, storage, and sale costs, go against the loan balance.
- A deficiency claim if the net proceeds do not cover the balance, plus the costs. On a full-recourse note, that claim is against the guarantors, not just the LLC that signed.
This is the civilian commercial-law version of a secured loan, not a criminal process. It is also not universal: the note, the state, and whether a guarantor signed all change the last step. Read your note with a lawyer if you are actually in default. Do not use this page as a cure strategy.
Questions buyers actually ask
If I catch up the payments, do I get the aircraft back?
If you cure inside the period the note allows, usually yes. After the lender has sold it, no. Call before the ferry, not after the auction.
Does bankruptcy stop a ferry?
It can impose a stay. It does not erase the lien. Talk to a bankruptcy lawyer before you file in order to “keep the keys.”