When commercial entities do not pay on debts they owe, creditors may take steps to collect payment in other ways. One reasonable course of action for some creditors is to file UCC-Uniform Commercial Code-1. This is a legal statement that outlines a creditor’s intent to exercise the right to collect personal property and assets from parties who defaulted on business loans. This is a public notice, typically printed in newspapers and posted in other places.
What does a UCC-1 statement do?
This notice may outline which assets get priority in collection. It may list the assets the creditor intends to seize, the order in which they may be collected and other details. These details are especially important when there are multiple creditors involved. As a UCC-1 statement is a lien, a creditor will have to know what type of lien is most appropriate for the details of the individual situation.
How can it be used?
When creditors undertake the collection of commercial debt through a UCC-1 statement, they must be careful to follow appropriate guidelines. Collecting property and assets can be a complex process, and it is helpful to work with an attorney who understands the applicable laws and technicalities of the collection process.
Before moving forward with any specific route for commercial debt collection, you will want to understand your rights and the most beneficial way to proceed. Debtors have rights, and you as a creditor must move forward to protect your financial interests without infringing on these rights. In some circumstances, it may be most effective to do this with a UCC-1 statement.