When a creditor has a mortgage, or pledge of real or personal property of the debtor, or a lien thereon, for securing the payments of a debt owing to him from the debtor, or an attachment or execution on property of the debtor duly recorded and not dissolved under this Title, he shall be admitted as a creditor for the balance of the debt only, after deducting the value of such property, such value to be ascertained by agreement between him and the receiver, if any, and if no receiver, then upon such sum as the court may decide to be fair and reasonable, before the election of an assignee, or by a sale thereof, to be made in such manner as the court shall direct; or the creditor may release or convey his claim to the receiver, if any, or if no receiver then to the commissioner, before the election of an assignee, or to the assignee if an assignee has been elected upon such property, and be admitted to prove his whole debt. If the value of the property exceeds the sum for which it is held as security, the assignee may release to the creditor the debtor’s right of redemption thereon on receiving such excess; or he may sell the property, subject to the claim of the creditor thereon, and in either case the assignee and creditor, respectively, shall execute all deeds and writings necessary or proper to consummate the transaction. If the property is not sold or released, or delivered up, or its value fixed, the creditor shall not be allowed to prove any part of his debt, but the assignee shall deliver to

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CH. 50 INSOLVENCY LAW

the creditor all such property upon which the creditor holds a mortgage, pledge, or lien, or upon which he has an attachment or execution.
SOURCE: CCP § 1356.