47-9620. Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral
601 words·~3 min read·
/az/title-47/47-9620A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
A. Except as otherwise provided in subsection G of this section, 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 of this section;
2. The secured party does not receive, within the time set forth in subsection D of this section, 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 47-9621; 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 of this section does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to section 47-9624.
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 of this section 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, paragraph 2 of this section, 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 47-9621, 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 47-9621; or
(b)If a notification was not sent, before the debtor consents to the acceptance under subsection C of this section.
E. A secured party that has taken possession of collateral shall dispose of the collateral pursuant to section 47-9610 within the time specified in subsection F of this section if:
1. Sixty per cent of the cash price has been paid in the case of a purchase money security interest in consumer goods; or
2. Sixty per cent of the principal amount of the obligation secured has been paid in the case of a nonpurchase money security interest in consumer goods.
F. To comply with subsection E of this section, 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.