---
kind: "section"
citation: "20 C.F.R. § 422.842"
title: "20"
number: "422.842"
heading: "Liquidation of collateral."
url: "https://uscodex.org/cfr/20/422.842"
---

# §422.842. Liquidation of collateral.

- (a)
  - (1) If the debtor fails to pay the debt(s) within a reasonable time after demand and if such action is in the best interests of the United States, we will liquidate security or collateral through the exercise of a power of sale in the security instrument or a non-judicial foreclosure and apply the proceeds to the applicable debt(s).
  - (2) Collection from other sources, including liquidation of security or collateral, is not a prerequisite to requiring payment by a surety, insurer, or guarantor unless such action is expressly required by statute or contract.
  - (3) We will give the debtor reasonable notice of the sale and an accounting of any surplus proceeds and will comply with other requirements under law or contract.
- (b) Where there is reason to believe that a bankruptcy petition has been filed with respect to a debtor, we will contact the Office of the General Counsel for legal advice concerning the impact of the Bankruptcy Code, particularly with respect to the applicability of the automatic stay, [11 U.S.C. 362](/usc/11/362.md), and the procedures for obtaining relief from such stay prior to proceeding under [paragraph (a)](#a) of this section.

## Notes

### Authority

Authority: Sec. 97, Pub. L. 97-365, 96 Stat. 1749; Sec. 104, Pub. L. 104-134, 110 Stat. 1321; 5 U.S.C. 552; 5 U.S.C. 553; 31 U.S.C. 3711; 31 U.S.C. 3716; 31 U.S.C. 3717; 31 U.S.C. 3720A; 31 U.S.C. 3720B; 31 U.S.C. 3720C; 31 U.S.C. 3720D; 31 U.S.C. 3720E; 31 CFR parts 901-904; 31 CFR part 285; 5 U.S.C. 5514; 5 CFR part 550; 42 U.S.C. 902(a)(5).

### Source

Source: 80 FR 61734, Oct. 14, 2015, unless otherwise noted.

### Source

Source: 32 FR 13653, Sept. 29, 1967, unless otherwise noted.