Ky. Rev. Stat. § 355.9-620

Current through 2024 Ky. Acts ch. 225

Section 355.9-620 - [Effective 1/1/2025] Acceptance of collateral in full or partial satisfaction of obligation - Compulsory disposition of collateral

(1) Except as otherwise provided in subsection (7) of this section, a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:

(a) The debtor consents to the acceptance under subsection (3) of this section;

(b) The secured party does not receive, within the time set forth in subsection (4) of this section, a notification of objection to the proposal signed by:

1. A person to which the secured party was required to send a proposal under KRS 355.9-621; or

2. 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;

(c) If the collateral is consumer goods, the collateral is not in the possession of the debtor when the debtor consents to the acceptance; and

(d) subsection (5) of this section does not require the secured party to dispose of the collateral or the debtor waives the requirement pursuant to KRS 355.9-624.

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

(a) The secured party consents to the acceptance in a signed record or sends a proposal to the debtor; and

(b) The conditions of subsection (1) of this section are met.

(3) For purposes of this section:

(a) 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

(b) 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:

1. 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;

2. In the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and

3. Does not receive a notification of objection signed by the debtor within twenty (20) days after the proposal is sent.

(4) To be effective under subsection (1)(b) of this section, a notification of objection must be received by the secured party:

(a) In the case of a person to which the proposal was sent pursuant to KRS 355.9-621, within twenty (20) days after notification was sent to that person; and

(b) In other cases:

1. Within twenty (20) days after the last notification was sent pursuant to KRS 355.9-621; or

2. If a notification was not sent, before the debtor consents to the acceptance under subsection (3) of this section.

(5) A secured party that has taken possession of collateral shall dispose of the collateral pursuant to KRS 355.9-610 within the time specified in subsection (6) of this section if:

(a) Sixty percent (60%) of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or

(b) Sixty percent (60%) of the principal amount of the obligation secured has been paid in the case of a non-purchase-money security interest in consumer goods.

(6) To comply with subsection (5) of this section, the secured party shall dispose of the collateral:

(a) Within ninety (90) days after taking possession; or

(b) 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.

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

KRS 355.9-620

Amended by 2024 Ky. Acts ch. 10,§ 90, eff. 1/1/2025.

Effective:7/1/2001
Created 2000, Ky. Acts ch. 408, sec. 138, effective7/1/2001.

This section is set out more than once due to postponed, multiple, or conflicting amendments.