What is the primary action a creditor must take for strict foreclosure?

The primary action a creditor must take for strict foreclosure involves sending a proposal to the debtor. In a strict foreclosure scenario, a creditor has the option to keep the collateral in satisfaction of the debtor's obligation without going through a sale process. This typically requires the creditor to formally communicate to the debtor their intention to retain the collateral in lieu of payment, which is often done by sending a proposal.

The proposal generally outlines the creditor's intention to forgo the sale of the collateral and treat it as satisfaction for the outstanding debt, provided the debtor does not object or pay off the debt within a specified time frame. This process allows the debtor to either agree to the terms laid out in the proposal or take necessary action to remedy the default.

Filing a lawsuit against the debtor is related to judicial foreclosure rather than strict foreclosure because it seeks a court's involvement in the enforcement of the security interest. Retaining possession of the collateral immediately may be pertinent in some contexts but does not fully encapsulate the necessary actions of proposing strict foreclosure to the debtor. Notifying the debtor of default status is also a crucial step, yet it is not the primary action involved in the strict foreclosure process itself.