Settlement of Bad Debts with Collateral Takeover Mechanism at Restu Artha Abadi Rural Bank. Master of Notarial Law, Faculty of Law, Sebelas Maret University. This study aims to analyze the settlement of bad debts through the Collateral Takeover Mechanism at Restu Artha Abadi Rural Bank and legal protection for debtors. The empirical research method used is an interview approach and literature study. The results of the study indicate that the application of the precautionary principle with the 6C elements (Character, Capacity, Capital, Collateral, Condition, Constraint) is fais optimal. The elimination of the Collateral Takeover Mechanism settlement deadline according to Financial Services Authority Regulation Number 1 of 2024 provides flexibility for creditors to liquidate collateral, but creates legal uncertainty for debtors. In these conditions, the value of collateral, economic situation, and procedural obstacles are important factors in maintaining asset sustainability. Without clear and fair rules, the elimination of the deadline for settlement of Collateral Takeover Mechanism m risks worsening the debtor's position, including potential losses from the auction implementation. Legal efforts that can be taken by debtors through lawsuits to the court on the basis of unlawful acts to cancel the auction. This study recommends Restu Artha Abadi Rural Bank to formulate internal policies in the settlement of Collateral Takeover Mechanism to overcome legal uncertainty and Collateral Takeover Mechanism can be disbursed as soon as possible, strengthen the implementation of the 6C principle, and conduct periodic evaluations of the collateral value. In addition, the Financial Services Authority needs to regulate the deadline for settlement of collateral.
