Use or disposition of collateral permissible

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  • (a) When security interest not invalid or fraudulent. A security interest is not invalid or fraudulent against creditors solely because:

    • (1) the debtor has the right or ability to:

      • (A) use, commingle, or dispose of all or part of the collateral, including returned or repossessed goods;

      • (B) collect, compromise, enforce, or otherwise deal with collateral;

      • (C) accept the return of collateral or make repossessions; or

      • (D) use, commingle, or dispose of proceeds; or

    • (2) the secured party fails to require the debtor to account for proceeds or replace collateral.

  • (b) Requirements of possession not relaxed. This section does not relax the requirements of possession if attachment, perfection, or enforcement of a security interest depends upon possession of the collateral by the secured party.


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