(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 42a-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 42a-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 subdivision (2) of subsection (a) 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 42a-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 42a-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 42a-9-610 within the time specified in subsection (f) 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 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.
(h) Nothing in subsection (b) shall prohibit a consumer in a consumer goods transaction from proving that the secured party has agreed to accept the collateral in full satisfaction of the obligation by means other than an authenticated record.
(P.A. 01-132, S. 117.)
Annotations to former section 42a-9-505:
Cited. 221 C. 530.
Cited. 40 CA 616; 41 CA 324.