Leverage Your UCC Filing in the Collection Process

Leverage Your UCC Filing in the Collection Process

The collections process is not a “desired” process. By desired, I mean, no one actually wants to go through it – creditors and debtors alike. But, if you have a UCC filing and your customer has defaulted, you may want to pursue the collection process.

If remedies like demand letters & repossession of goods fail, you may need to enlist the assistance of a collection agency. While I am biased, I would strongly recommend seeking assistance from an agency that also specializes in UCC filings (*fake cough* NCS…).

I mean really – would you go to your cardiologist and ask him to look at the muffler on your car? Of course not!

Leveraging a UCC filing in the collection process is significantly more effective than attempting to collect without any leverage. This is the reason crazy things like blackmail are effective – you have something that another party wants.

To be clear, I do not condone blackmail – unless it’s in a movie or TV show as a great plot twist – but I do support LEGAL ways of securing your receivables.

What Information Should I Send to a Collections Agency?

We have previously discussed the importance of providing your collection agency and/or collector with sufficient information on the collection. (If you need a refresher, you can check out this post.)

You should send the usual suspects: invoices, statement of account, correspondence, but there are also a few UCC specific items you should include.

• A copy of the signed Security Agreement
• A recorded copy of the UCC filing
• A current UCC search: This may indicate whether or not there are other secured parties and determines priority of your filing
• A description of the item(s) sold aka the collateral: Is the collateral easily removable? Example: is it a 10 ton crane or a pallet of 2 oz widgets
• The claim amount (how much you are owed by the debtor)
• The current fiscal status of your debtor: Is their corporate standing with the Secretary of State current, are they in default on other debts, have they simply gone out of business or filed for bankruptcy protection etc.

It’s All about the Leverage

Your UCC filing is your leverage – providing you a security interest in the event of default – don’t misuse your leverage… use it right or lose it!

If you have questions about the UCC filing and collection process, please don’t hesitate to contact us!