US Uniform Commercial Code Article 9 Secured Transactions 9-607-9-608-collection: Collect directly from account debtors after default, deal with collateral in a commercially reasonable way when undertaking collection, and apply proceeds in the statutory order with the surplus and deficiency consequences

What does 9-607-9-608-collection require?

After default (or earlier if agreed) a secured party may direct an account debtor, or anyone else obligated on the collateral, to pay it, take proceeds it is entitled to, enforce the obligations of account debtors, apply the balance of a deposit account it controls to the secured obligation, and, where the collateral is a mortgage or other lien, record its rights to enforce the mortgage non-judicially (section 9-607); a secured party that undertakes collection or enforcement must proceed in a commercially reasonable manner where it can charge back what it fails to collect or otherwise has recourse to the debtor, and may deduct reasonable expenses including attorney's fees where the agreement provides. Cash proceeds of collection are applied first to those expenses, then to the secured obligation, then to subordinate interests that made an authenticated demand; any surplus goes to the debtor and any shortfall is owed by the obligor, except in an outright sale of receivables, where neither surplus nor deficiency arises unless agreed (section 9-608).