Because of depreciation, the amount received on the sale of collateral may be less than the amount owed on the debt, but a debtor who has defaulted is not likely to have the funds to pay the deficiency.

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Depreciation causes the value of assets to decrease over time, which means that the sale of collateral may not cover the full amount owed on a debt. In the case of default, the debtor is unlikely to have additional funds to pay the remaining deficiency.

Because of Depreciation, the Amount Received on the Sale of Collateral