Wisconsin Statutes

Wis. Stat. § 409.205 (2026)

Use or disposition of collateral permissible

✓ current as of July 2026

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409.205409.205 Use or disposition of collateral permissible.

409.205(1)(1) When security interest not invalid or fraudulent. A security interest is not invalid or fraudulent against creditors solely because:

409.205(1)(a)(a) The debtor has the right or ability to:

409.205(1)(a)1.1. Use, commingle, or dispose of all or part of the collateral, including returned or repossessed goods;

409.205(1)(a)2.2. Collect, compromise, enforce, or otherwise deal with collateral;

409.205(1)(a)3.3. Accept the return of collateral or make repossessions; or

409.205(1)(a)4.4. Use, commingle, or dispose of proceeds; or

409.205(1)(b)(b) The secured party fails to require the debtor to account for proceeds or replace collateral.

409.205(2)(2) Requirements of possession not relaxed. This section does not relax the requirements of possession if attachment, perfection, or enforcement of a security interest depends upon possession of the collateral by the secured party.

409.205 HistoryHistory: 2001 a. 10.

409.205 AnnotationUnder this section, the debtor is freed from strict accountability to the secured creditor for the property secured, and the validity of a secured interest in after-acquired property is specifically recognized. When a creditor has a security interest in the debtor’s after-acquired property, the debtor is able to commingle the debtor’s property and use it to the debtor’s best interest. The acquiescence of the secured creditor under an after-acquired clause by the debtor does not invalidate the security interest of the creditor. Burlington National Bank v. Strauss, 50 Wis. 2d 270, 184 N.W.2d 122 (1971).

409.205 NoteNOTE: The above annotation cites to the pre-2001 Wis. Act 10 version of this section.

Notes of Decisions

Cited in 4 cases, 1971–2000 · leading case: Miracle Feeds, Inc. v. Attica Dairy Farm, 385 N.W.2d 208 (Wis. Ct. App. 1986).

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Miracle Feeds, Inc. v. Attica Dairy Farm, 385 N.W.2d 208 (Wis. Ct. App. 1986). · cites it 12× “The Legislative Council Report accompanying the act summarized *382 the changes made by sec. 409.205, Stats., as follows: [B]roader application [is given] to the principle.”

Christensen v. Equity Coop. Livestock Sale Ass'n, 396 N.W.2d 762 (Wis. Ct. App. 1986). · cites it 3× “In deciding Miracle Feeds, this court relied on sec. 409.205, Stats. 3 The Official U.C.C.”

Burlington Nat'l Bank v. Strauss, 184 N.W.2d 122 (Wis. 1971). · cites it 2× “In order to give more flexibility to such financing, the code freed the debtor from strict accountability to the secured creditor for the property secured, sec. 409.205, Stats., 1 and recognized the validity of a secured interest in after-acquired property, sec.”

Sampson Investments v. Sampson, 111 F. Supp. 2d 1064 (E.D. Wis. 2000). “”), as adopted by Wisconsin, reinforces the Court’s' conclusion with respect to the scope of the security interests created in favor of Bank One and Participants.”

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