Montana Code 30-9A-620. Acceptance of collateral in full or partial satisfaction — compulsory disposition of collateral
30-9A-620. Acceptance of collateral in full or partial satisfaction — compulsory disposition of collateral. (1) Except as otherwise provided in subsection (7), a secured party may accept collateral in full or partial satisfaction of the obligation it secures only if:
Terms Used In Montana Code 30-9A-620
- Collateral: means the property subject to a security interest or agricultural lien. See Montana Code 30-9A-102
- Consumer goods: means goods that are used or bought for use primarily for personal, family, or household purposes. See Montana Code 30-9A-102
- Consumer transaction: means a transaction to the extent that:
(i)an individual incurs an obligation primarily for personal, family, or household purposes;
(ii)a security interest secures the obligation; and
(iii)the collateral is held or acquired primarily for personal, family, or household purposes. See Montana Code 30-9A-102
- Debtor: means :
(i)a person having a property interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;
(ii)a seller of accounts, chattel paper, payment intangibles, or promissory notes; or
(iii)a consignee. See Montana Code 30-9A-102
- Goods: means all things that are movable when a security interest attaches. See Montana Code 30-9A-102
- 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.
- Person: includes a corporation or other entity as well as a natural person. See Montana Code 1-1-201
- Proposal: means a record authenticated by a secured party and including the terms on which the secured party is willing to accept collateral in full or partial satisfaction of the obligation it secures pursuant to 30-9A-620 through 30-9A-622. See Montana Code 30-9A-102
- Secured party: means :
(i)a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;
(ii)a person that holds an agricultural lien;
(iii)a consignor;
(iv)a person to which accounts, chattel paper, payment intangibles, or promissory notes have been sold;
(v)a trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or
(vi)a person that holds a security interest arising under 30-2-401, 30-2-505, 30-2-711(3), 30-2A-508(5), 30-4-208, or 30-5-118. See Montana Code 30-9A-102
(a)the debtor consents to the acceptance under subsection (3);
(b)the secured party does not receive, within the time set forth in subsection (4), a notification of objection to the proposal authenticated by:
(i)a person to which the secured party was required to send a proposal under 30-9A-621; or
(ii)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) does not require the secured party to dispose of the collateral.
(2)A purported or apparent acceptance of collateral under this section is ineffective unless:
(a)the secured party consents to the acceptance in an authenticated record or sends a proposal to the debtor; and
(b)the conditions of subsection (1) 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 authenticated 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 authenticated after default or the secured party:
(i)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;
(ii)in the proposal, proposes to accept collateral in full satisfaction of the obligation it secures; and
(iii)does not receive a notification of objection authenticated by the debtor within 20 days after the proposal is sent.
(4)To be effective under subsection (1)(b), 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 30-9A-621, within 20 days after notification was sent to that person; and
(b)in other cases:
(i)within 20 days after the last notification was sent pursuant to 30-9A-621; or
(ii)if a notification was not sent, before the debtor consents to the acceptance under subsection (3).
(5)A secured party that has taken possession of collateral shall dispose of the collateral pursuant to 30-9A-610 within the time specified in subsection (6) if:
(a)60% of the cash price has been paid in the case of a purchase-money security interest in consumer goods; or
(b)60% of the principal amount of the obligation secured has been paid in the case of a nonpurchase-money security interest in consumer goods.
(6)To comply with subsection (5), the secured party shall dispose of the collateral:
(a)within 90 days after taking possession; or
(b)within any longer period to which the debtor and all secondary obligors have agreed by authenticating a record including a statement to that effect after default.
(7)In a consumer transaction, a secured party may not accept collateral in partial satisfaction of the obligation it secures.