After a debtor's accounts have been repossessed, can the account debtor still pay the debtor to discharge the debt?

The correct answer indicates that once a creditor reclaims possession of the accounts, any payments made by an account debtor must go directly to the creditor, not to the debtor. This is rooted in the general principles of secured transactions and the rights of parties involved following repossession.

When repossession occurs, the debtor’s rights over the repossessed collateral, in this case, the accounts, are effectively transferred to the creditor. This means that the account debtor must honor their obligation by paying the creditor who now holds the right to collect. Paying the debtor instead would not discharge their obligation because the debtor no longer possesses the authority to collect from the account debtor concerning that particular obligation.

Understanding this concept is crucial in secured transactions, as it highlights the transition of rights and obligations in the event of a repossession. Debtors should be aware that their rights or responsibilities can change upon the creditor’s exercise of its security interest, emphasizing the importance of communication and acknowledgment of the repossession in financial transactions.

Other options might suggest there are ways for the debtor to still accept payment or negotiate after repossession, misrepresenting the formalities required in dealing with secured obligations post-repossession.