Michigan Collections Manager License Practice Test

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Prepare for the Michigan Collections Manager License Test with flashcards and multiple choice questions. Each question is equipped with hints and detailed explanations to enhance your understanding and readiness.

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What must a secured party do after accepting collateral?

Notify the debtor at least 30 days prior
Discharge the debtor's obligation
Immediately sell the collateral
Hold collateral for 6 months

The correct answer is: Discharge the debtor's obligation

After a secured party accepts collateral, the correct action relates to the obligations of the debtor. When a secured party accepts collateral in satisfaction of the debtor's obligation, it effectively discharges the debtor's obligation. This is part of the UCC (Uniform Commercial Code) provisions, which recognize that if a secured party accepts collateral in full or partial satisfaction of a debt, the debtor's obligation to repay the loan is reduced or eliminated based on the value of the collateral accepted. It's important to note that the other options do not accurately reflect the requirements or actions necessary once collateral is accepted. For instance, notifying the debtor or selling the collateral are not mandatory actions following the acceptance of collateral. Holding collateral for a specified duration is also not a requirement under the UCC in relation to discharging the debtor's obligation. Instead, the focus remains on the acceptance of collateral as a means to fulfill or reduce the debtor's outstanding obligation.