What Every Secured Party Creditor Needs To Know About UCC-1 Forms

Published: 13th July 2010
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It is utterly important for secured party creditors to know the proper way to fill out and file a UCC-1 form. Filing and completing the form correctly can not only properly secure the loan but also protect the debt from being discharged through bankruptcy proceedings.

A UCC-1 is a form that lists all personal property that is pledged as security for a loan. This can be any property, other than real estate or a vehicle, that is owned by the individual receiving the loan. There are a multitude of items that can be used as security. These include but are not limited to TV's, stereo systems, DVD collections, baseball card and comic book collections. Musical instruments and equipment as well as computers can also be listed.

Once the items are written on the UCC-1 form, the debtor or debtors will have to sign the UCC-1 form and a financing statement to indicate that they are aware that the items listed are being pledged as security for the loan. The form also must include both the debtor's name and address as well as the name and address of the secured party creditor. This is a major step in securing the loan, but it can actually end up being a meaningless one unless the UCC-1 form is filed correctly.

The actual filing of the form will depend on the state it is being filed in, but it will have to be filed with either the county clerk's office or the secretary of state. There have been quite a few secured party creditors who have made the mistake of having their UCC-1 filled out correctly and then just sticking it in the customer's file. This will mean that the lien on the security has not been perfected, and thus result in an unsecured loan.

While the filing of a UCC-1 does protect a secured creditor in the event of bankruptcy, it is not a guarantee that the creditor will be paid. Different states have different laws in regards to personal property and the way it applies to bankruptcy, but the fact that the lien is perfected will at least result in being in a better position than any unsecured creditors. While it could result in the debtor only being responsible for part of the debt, it is a much better position to be in than not getting paid at all.

Every secured party creditor must be educated in the proper use and filing of a UCC-1 form. Any lack of knowledge in this area could result in grave results for the creditor in the long run.

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