When you are dealing with a UCC-Lien, it is important to understand the process of how to remove it. Some steps can be followed to remove the lien and ensure your credit score is not affected. Our New York legal team provides tips on how to deal with this type of lien.
What is a UCC-Lien?
A UCC-Lien, or UCC-1, which stands for "Uniform Commercial Code," is a type of security interest. This means that the creditor has the right to seize your assets if you do not is a type of security interest that can be placed on your assets by creditors. This can include property, vehicles, or other assets used as collateral for a loan. UCC-Liens can also be placed on your business, meaning that the creditor has the right to seize your business assets if you do not repay the loan.
How Does a UCC-Lien Affect My Credit Score?
UCC-Liens do not affect your credit score directly. However, if the assets seized by the creditor are sold, the proceeds will be used to pay off the debt. However, it can affect your ability to get credit again in the future.
Ways to Remove a UCC Filing
A lender should remove a UCC-1 when you pay off its debt in a perfect world. It doesn't always work that way, unfortunately. It is possible to satisfy a debt fully yet discover that the UCC-1 filing remains. The following steps can be taken if an outstanding UCC lien remains in place after you fulfill a debt:
Ask the lender to terminate the lien upon payoff.
A good rule of thumb is to request that your lender file a UCC-3 form with your secretary of state as soon as possible after you pay off your loan. The UCC-3 will terminate the lien on your company's assets (or assets) and remove the UCC-1 filing.
It is important to note that removing the UCC filing from your business credit report may or may not occur. It will not remove a closed UCC filing unless it receives a request from a customer or the lien has been inactive for 11 years. You should always verify.
Visit your secretary of state's office.
To find UCC filings against your company, check your business credit reports and your secretary of state's website. Alternatively, if your lender fails to file a UCC-3 form after you satisfy a debt, you may consider filing one yourself. You will usually need to visit the secretary of state's office in person. It is highly recommended to seek the assistance of a UCC lien attorney to assist you through the process. This can save you a lot of time.
Business credit reports should be disputed if they contain inaccurate information.
It's a good idea to keep tabs on your three major business credit reports, Dun & Bradstreet, Experian, and Equifax. Suppose you discover an outdated UCC filing on your credit reports which have already been released. In that case, you can dispute the mistake and ask the business credit reporting agencies to remove it from your reports. Keep in mind, however, that no federal law requires them to do so.
Don't Wait Until the Last Minute
Your state's public records and business credit reports take time to change. If you plan to apply for new business financing, it's wise to ensure you're well-prepared for the loan application. Our experienced legal team at Jacovetti Law, P.C. can help you understand your options and take steps to protect your business.
Not sure which course of action is best for you? Contact our UCC-Lien attorneys today at (516) 217-4488 to schedule a consultation!