---
kind: "section"
citation: "31 C.F.R. § 901.7"
title: "31"
number: "901.7"
heading: "Liquidation of collateral."
url: "https://uscodex.org/cfr/31/901.7"
---

# §901.7. Liquidation of collateral.

- (a) Agencies should liquidate security or collateral through the exercise of a power of sale in the security instrument or a nonjudicial foreclosure, and apply the proceeds to the applicable debt(s), if the debtor fails to pay the debt(s) within a reasonable time after demand and if such action is in the best interest of the United States. 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.
- (b) When an agency learns that a bankruptcy petition has been filed with respect to a debtor, the agency should seek legal advice from its agency counsel concerning the impact of the Bankruptcy Code, including, but not limited to, [11 U.S.C. 362](/usc/11/362.md), to determine the applicability of the automatic stay and the procedures for obtaining relief from such stay prior to proceeding under [paragraph (a)](#a) of this section.

## Notes

### Authority

Authority: 31 U.S.C. 3701, 3711, 3716, 3717, 3718, and 3720B.

### Source

Source: 65 FR 70396, Nov. 22, 2000, unless otherwise noted.