KRS 396.105: Payment of secured claim.

Payment of a secured claim shall be upon the basis of the amount allowed if the creditor

surrenders his security; otherwise payment shall be upon the basis of one (1) of the

following:

(1) If the creditor exhausts his security before receiving payment, unl ess precluded by

other law, upon the amount of the claim allowed less than the fair value of the

security; or

(2) If the creditor does not have the right to exhaust his 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 personal

representative by agreement, arbitration, compromise or litigation.