The test for unjustifiable impairment of collateral not in the creditor’s possession is whether the creditor exercised reasonable care considering the circumstances of the case. The burden of proof is on the party claiming the defense, and he must prove it by a preponderance of the evidence. Bank of Ripley v. Sadler, 671 SW2d 454 (1984). See Annot., “What Constitutes Unjustifiable Impairment of Collateral, Discharging Parties to Negotiable Instrument, Under UCC 3-606 (1) (b)?” 95 ALR 3d 962 (1979). 
Failure to execute a security agreement in the collateral constitutes an impairment of collateral. White v. Household Fin., 302 NE2d 828 (1973); North Bank v. Circle Investment Co., 432 NE2d 1004 (1982). See also Hurt v. Citizens Trust Co., 128 Ga. App. 224 (196 SE2d 349) (1973); First Guaranty Bank v. Szekeres, 139 Ga. App. 124 (227 SE2d 908) (1976)
For this purpose the law holds that “impairs” means injured, allowed to deteriorate in value, or that the creditor was negligent in failing to foreclose prior to the bankruptcy of the debtor. Depending on jurisdiction, the court can decide the matter recognizing a  burden of proof   on the guarantor or accommodation party to show impairment of the collateral. Mitchell v. Ringson, 169 Ga. App. 88 (311 SE2d 516) (1983).

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