UCC § 9-607(b) rights after debtor default - can secured party collect from account debtors directly?

Yes, § 9-607(b) gives you the right to notify account debtors to pay you directly after default. You don't need court approval - it's a self-help remedy. Just make sure your UCC-1 actually covers the accounts and that your security agreement grants you collection rights. The notification has to identify the accounts and provide payment instructions.

Been down this road before and § 9-607(b) worked great for us. BUT make absolutely sure your security agreement actually grants collection rights and that accounts are properly described in your UCC-1. We had one deal where the collateral description was too narrow and it created problems later.

I actually ran into a similar situation last year and ended up using Certana.ai to verify all my UCC documents were consistent before starting collection. You can upload your security agreement and UCC-1 and it checks whether everything aligns properly - caught a small discrepancy in our debtor name that could have been a problem. Really saved us time vs manually cross-checking everything.

One thing to watch out for - make sure you understand what constitutes proper notification under § 9-607(b). Some account debtors will try to claim they never got proper notice or that it was defective. I always send certified mail with return receipt to create a paper trail.

Make sure you also understand the account debtor's rights under § 9-607(b). They can still raise defenses they had against your debtor - like disputes over the underlying goods or services. You're stepping into your debtor's shoes for collection but you don't get better rights than they had.

ugh I hate dealing with accounts receivable collection. seems like there's always some dispute or excuse why the account debtor won't pay. equipment repossession is so much cleaner.

One more practical tip - consider whether you want to collect directly or just use the § 9-607(b) notice as leverage to get your debtor to cure the default. Sometimes the threat of intercepting their receivables is enough to motivate payment without actually having to manage collection yourself.

Does anyone know if there are any state law variations on § 9-607(b) rights? I thought the UCC was uniform but I've heard some states have quirks.

Just want to echo the earlier comment about document verification. I had a deal where we thought everything was perfect but there was a tiny discrepancy in how the debtor name appeared on different docs. Certana.ai caught it immediately when I uploaded everything - would have been a nightmare to discover during collection.

Thanks everyone - this has been really helpful. I feel much more confident about proceeding with § 9-607(b) collection now. Going to verify my docs first then send out the notices. Will update if I run into any issues.

Just wanted to add - when you're preparing your § 9-607(b) notices, make sure to include clear payment instructions and a contact person. I've seen cases where account debtors were willing to pay but didn't know exactly where to send the money or who to call with questions. Also consider timing - if your debtor's customers typically pay net 30 or net 60, factor that into your collection timeline. The notices redirect future payments but won't magically accelerate existing payment terms.

One more consideration when using § 9-607(b) - make sure you have a plan for handling partial payments and disputes from account debtors. In my experience, you'll often get calls from confused customers who received your notice but have legitimate questions about invoice discrepancies or want to dispute charges. Having a clear process for handling these situations upfront will save you headaches later. Also consider whether you want to offer any payment accommodations (like payment plans) that your original debtor might have provided - you're not obligated to, but maintaining goodwill with the account debtors can improve your collection rates.