§ 5-3-203 — Debt secured by cross-collateral

(1) If debts arising from two or
more consumer credit sales, other than sales pursuant to a revolving credit
account, are secured by cross-collateral or consolidated into one debt payable on a
single schedule of payments and the debt is secured by security interests taken
with respect to one or more of the sales, payments received by the seller after the
taking of the cross-collateral or the consolidation are deemed, for the purpose of
determining the amount of the debt secured by the various security interests, to
have been applied first to the payment of the debts arising from the sales first
made. To the extent debts are paid according to this section, security interests in
items of property terminate as the debts originally incurred with respect to each
item are paid.

(2) Payments received by the seller upon a revolving credit account are
deemed, for the purpose of determining the amount of the debt secured by the
various security interests, to have been applied first to the payment of finance
charges in the order of their entry to the account and then to the payment of debts
in the order in which the entries to the account showing the debts were made.

(3) If the debts consolidated arose from two or more sales made on the same
day, payments received by the seller are deemed, for the purpose of determining
the amount of the debt secured by the various security interests, to have been
applied first to the payment of the smallest debt.

Legislative History

Source: L. 2000: Entire article R&RE, p. 1219, � 1, effective July 1.