§ 1209. Secured claims

Payment of a secured claim is upon the basis of the amount allowed if the creditor surrenders his or her security; otherwise payment is upon the basis of one of the following:

(1) if the creditor exhausts his or her security before receiving payment, unless precluded by other law upon the amount of the claim allowed less the fair value of the security; or

(2) if the creditor does not have the right to exhaust his or her security or has not done so, upon the amount of the claim allowed less the value of the security determined by converting it into money according to the terms of the agreement pursuant to which the security was delivered to the creditor, or by the creditor and executor or administrator by agreement, arbitration, compromise, or litigation. (Added 1975, No. 240 (Adj. Sess.), § 7.)