What Is A UCC Filing
A UCC filing on a business is also known as a lien on a business. A UCC filing on a business is done by a creditor who is interested in taking control of the company because the business is in debt to the creditor. The only way that a creditor can file a UCC lien on a business is if the debtor used his or her business for collateral to secure a loan or some type of financing. The abbreviation UCC stands for the Uniform Commercial Code. The UCC is just a set of rules and regulations that are used to regulate commercial transactions.
When Were The UCC Laws Created
The Uniform Commercial Code was first established back in 1952. The goal of the Uniform Commercial Code was to protect lenders and regulate commercial transactions. Since 1952 there have been changes made to certain parts of the Uniform Commercial Code, such as article 9. The changes made in article 9 were done by the Uniform Law Commission and was enforced in all 50 states. Article 9 changes, or revisions were made back in 1998. These changes were made to improve the UCC filing process. Article 9 was revised a second time more recently back in 2010. The reason why Article 9 was revised or amended was that the Uniform Law Commission wanted to consolidate and streamline its filing rules and regulations.
The Purpose Of A UCC Lien
The purpose of a UCC lien is to protect A lender from taking a loss from a business that is given a loan. A UCC lien can also be considered a security agreement. The UCC lien states if the company does not repay its debt to the lender, then the lender can put a lien on all of the business’s inventory and equipment. The lien gives the lender the legal right to keep possession of the business’s stock and equipment until the debt is paid in full. A UCC lien can also be looked at as a protection plan for institutions or businesses that lend money to small businesses or companies. It protects the lender from taking a loss if the debtor experiences bankruptcy or defaults on the loan.
How Are UCC Filings Done
If a business is approved for a loan, the lender will immediately file a UCC-1 financing statement with the secretary of state. Once the lender files this documentation, it will create a lien against whatever asset was used as collateral to secure the loan. In some cases, the lender may file something called a blanket lien. A blanket lien filing means that all business assets are used as collateral and have a lien on them. When a lender files the UCC – 1 financing statement with the state secretary, three key pieces of information are found in the documentation. The three critical pieces of information are number one, the name and address of the borrower, number two the name and address of the lender, and number three what type of collateral will be put up for the loan.
What Type Of Property Can UCC Liens Be Placed On
The most common types of UCC liens are property or real estate liens. A creditor can also seek a judgment in court to put a lien on a debtor’s bank account to retrieve the debt. The only thing that a creditor does not have access to take from a debtor is personal property such as food, clothing, and furniture. In most states, if a creditor has a lien on a business’s business equipment the judge will allow them to keep a few thousand dollars worth of equipment to continue to operate so they can earn the funds needed to pay off the debt.