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What Business Owners Should Know About UCC Liens

As a business owner, it's essential to be aware of UCC liens and their potential dangers. UCC liens are filed when a company has not paid for goods or services that have been provided. For business owners, this can be a serious issue, as they may lose their property or assets if the lien is not resolved. Our New York debt relief lawyers give an in-depth breakdown of UCC liens, how they work, and how you can protect yourself.

What is a UCC Lien?

A UCC lien is a type of security interest that creditors can file when a debtor has not paid for goods or services that have been provided. It is possible for business owners to lose their property or assets if the lien is not resolved. UCC liens are governed by the Uniform Commercial Code (UCC), a set of laws that govern commercial transactions.

How Does a UCC Lien Work?

When a UCC lien is filed, the creditor has the right to take possession of the debtor's property or assets to satisfy the debt. UCC liens are typically filed against businesses, but they can also be filed against individuals.

To illustrate, imagine you own a small coffee shop in New York and want to borrow money to buy a new espresso machine in order to stay competitive. If you secure equipment financing, your lender will file a UCC lien, stating that if you fail to repay the espresso machine debt, your lender can repossess the espresso machine.

How Will a UCC Lien Affect my Business?

Normally, UCC liens have a five-year term, which the creditor will renew if the loan is still active. There are three ways in which a UCC lien can affect your business:

Prevents Further Borrowing

UCC liens can make it difficult for business owners to obtain additional financing, as lenders will be hesitant to provide loans to businesses that already have UCC liens against them.

Impact on Your Business Credit Report

UCC liens will appear on your business credit report and can negatively impact your business's credit score. This, in turn, can make it challenging to obtain future financing and may also result in higher interest rates.

May Lead to Seizure of Assets

As mentioned previously, if this type of lien is not resolved, the creditor may take possession of your assets to satisfy the debt. This could have an impact on your day-to-day dealings as you may lose important equipment or inventory.

How Can I Protect Myself from UCC Liens?

If you are a business owner, you can take steps to protect yourself from UCC liens:

  1. You should make sure that you pay your bills on time. This will help to avoid UCC liens being filed against your business.
  2. You should keep accurate records of all transactions and communications with creditors. This will help to prove that you have paid for goods or services that have been provided.
  3. Be sure to monitor your business credit report regularly for any UCC liens that have been filed against your business. You can obtain a free copy of your business credit report from Experian Business CreditEdgeSM.
  4. You should consult with an attorney if you have any questions or concerns about UCC liens.

How Jacovetti Law, P.C. Can Help You

If you are a business owner and you have UCC liens against your business, Jacovetti Law, P.C. can help. Our team can negotiate with creditors on your behalf and work to resolve the UCC liens against your business. We can also help you obtain financing, even if you have UCC liens against your business.

Not sure which course of action is best for you? Contact our debt relief attorneys today at (516) 217-4488 to schedule a consultation!