3-in-3: Utilize the PMSI UCC to Get Paid
3-in-3 is a 3 question, 3 minute interview with an NCS colleague.
Today’s 3-in-3 features Amy Poje, Collections and Construction Services Manager. Read this post to learn more about how you can utilize the PMSI UCC to get paid.
My customer has defaulted; I filed a PMSI, what should I do?
Amy: What we recommend creditors do first is to contact their debtor and try to get the matter resolved amicably. It’s important that the creditor ask questions such as: “Do you have my inventory?”; “Can I come pick it up?”; “Are you still in business?” It’s important for the creditor to remind the debtor they’ve signed a security agreement and the debtor is technically in breach of contract.The creditor should also remind their debtor that they have filed the UCC which perfected their security interest and has given them a priority in either their inventory or equipment.
What should I do if the amicable route doesn’t work?
Amy: Although every case is different, there are some major benefits to sending an attorney demand letter. One of them is the low cost. It’s a flat fee and there’s no obligation for the creditor to formally place that debtor with collection at that point.
The creditor can customize the content of the letter, which includes attaching the signed security agreement and UCC filing. Another benefit is that the letter is sent via certified mail. That will alert the creditor as to whether or not the debtor has vacated the premises.
If the demand letter is unsuccessful, we recommend placing the debtor for collection. It’s important to have an expert attorney review your claim as soon as possible so that attorney can provide a recommendation on enforcing the security agreement and the UCC filing. It’s also important to know that legal action may need to be taken to properly repossess any inventory or equipment. Time is of the essence. It is important that the claim be reviewed by an expert in that industry.
Let’s assume we’ve gone through all those measures and then we find out our debtor sold off our inventory or equipment. Is there still value in obtaining counsel and trying to go after the claim with an attorney?
Amy: Absolutely. The creditor will have a breach of contract against the debtor via the security agreement. So at the very least, the creditor will be able to file suit against the debtor and any other responsible parties such as a personal guarantor. Again, getting the claim to an attorney who’s an expert in that field is the best bet.
Be proactive. Keep the lines of communication open with the debtor.
Act quickly once you realize there’s a problem, so you have the best chance to get your equipment or inventory back.
Have an attorney send a demand letter & include copies of the security agreement and UCC.
Contact NCS if you don’t know where to start. NCS has many clients who have successfully leveraged their security interest to repossess their inventory or equipment.