Section 400.9-620

Title XXVI TRADE AND COMMERCE

Chapter 400

Effective - 01 Jul 2001, see footnote   

  400.9-620.  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 authenticated by:

  (A)  A person to which the secured party was required to send a proposal under section 400.9-621; 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 section 400.9-624.

  (b)  A purported or apparent acceptance of collateral under this section is ineffective unless:

  (1)  The secured party consents to the acceptance in an authenticated 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 authenticated 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 authenticated 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 authenticated 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 section 400.9-621, 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 section 400.9-621; 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 section 400.9-610 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 authenticated after default.

  (g)  In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.

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(L. 2001 S.B. 288)

Effective 7-01-01