§ 57A-9-620 — Acceptance of collateral in full or partial satisfaction of obligation--Compulsory disposition of collateral.

(a) Except as otherwise provided in subsection (g), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if: (1) The debtor consents to the acceptance under subsection (c); (2) The secured party does not receive, within the time set forth in subsection (d), a notification of objection to the proposal signed by: (A) A person to which the secured party was required to send a proposal under § 57A-9-621 ; or (B) Any other person, other than the debtor, holding an interest in the collateral subordinate to the security interest that is the subject of the proposal; (3) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and (4) Subsection (e) does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to § 57A-9-624 . (b) A purported or apparent acceptance of collateral under this section is ineffective unless: (1) The secured party consents to the acceptance in a signed record or sends a proposal to the debtor; and (2) The conditions of subsection (a) are met. (c) For purposes of this section: (1) A debtor consents to an acceptance of collateral in partial satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record signed after default; and (2) A debtor consents to an acceptance of collateral in full satisfaction of the obligation it secures only if the debtor agrees to the terms of the acceptance in a record signed after default or the secured party: (A) Sends to the debtor after default a proposal that is unconditional or subject only to a condition that collateral not in the possession of the secured party be preserved or maintained; (B) In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and (C) Does not receive a notification of objection signed by the debtor within twenty days after the proposal is sent. (d) To be effective under subsection (a)(2), a notification of objection must be received by the secured party: (1) In the case of a person to which the proposal was sent pursuant to § 57A-9-621 , within twenty days after notification was sent to that person; and (2) In other cases: (A) Within twenty days after the last notification was sent pursuant to § 57A-9-621 ; or (B) If a notification was not sent, before the debtor consents to the acceptance under subsection (c). (e) A secured party that has taken possession of collateral shall dispose of the collateral pursuant to § 57A-9-610 within the time specified in subsection (f) if: (1) Sixty percent of the cash price has been paid in the case of a purchase - money security interest in consumer goods; or (2) Sixty percent of the principal amount of the obligation secured has been paid in the case of a non - purchase - money security interest in consumer goods . (f) To comply with subsection (e), the secured party shall dispose of the collateral: (1) Within ninety days after taking possession; or (2) Within any longer period to which the debtor and all secondary obligors have agreed in an agreement to that effect entered into and signed after default. (g) In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

Legislative History

SL 2000, ch 231; SL 2024, ch 198, § 89.