Harry, an authorized dealer, sells Lloyd an automobile for Lloyd’s personal driving use. The cash price of this model is $16,000, but since Lloyd does not have the cash, he purchases the car using Harry’s Loan Plan in which he makes 48 monthly payments of $350 each. Lloyd makes regular payments for more than 3 years before he gets into financial difficulties and fails to pay for a few months in a row. Harry then repossesses Lloyd’s car and sends Lloyd a notice that he intends to resell the car from his lot in two weeks, after he does minor repairs and cleaning. Harry sells the car to Mary for $12,000. His costs include $300 for repossession and $110 for getting the car repaired. At the time of repossession, Lloyd still owed $2,450 on the contract. Which statement is correct?

1. Lloyd, the debtor, is not entitled to any proceeds from the sale after his own default.

2. Lloyd is entitled to the sale proceeds remaining after deduction for the outstanding balance due on the contract.

3. Lloyd is entitled to the sale proceeds remaining after deduction for the costs Harry incurred for repossession and repairs.

4. Lloyd is entitled to the sale proceeds remaining after deduction for the outstanding balance due on the contract and the costs Harry incurred for repossession and repairs.