§490:9-620  Acceptance of collateral in full or partial satisfaction of obligation; compulsory disposition of collateral.  (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 § 490:9-621; 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 § 490:9-624.

Terms Used In Hawaii Revised Statutes 490:9-620

  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.

     (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 subsection (a)(2), 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 § 490:9-621, 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 § 490:9-621; 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 § 490:9-610 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.