Understanding UCC Filings: Top Questions Answered

When it comes to protecting your company’s receivables, UCC filings are one of the most effective tools available. Whether you’re supplying equipment, extending trade credit, or shipping inventory, a properly filed UCC ensures your place as a secured creditor and safeguards your financial interests. Still, many businesses have questions about deadlines, renewals, collateral descriptions, and other filing requirements. Understanding the basics can make all the difference in keeping your assets protected. 

Is there a Deadline to File a UCC? 

Depending on filing type, there may be a deadline for filing a UCC. As a general best practice, you should file your UCC-1 before you release goods to your customer. Failure to meet deadline requirements may jeopardize your position as a secured creditor. 

• Blanket: file prior to shipping goods to your customer. 
• PMSI in Inventory or Consignment: file the UCC, conduct a reflective search, and send notification letters prior to shipping inventory to your customer. Shipping inventory before you’ve completed these steps may result in an unsecured status. 
• PMSI in Equipment: file no later than 20 days  after your customer receives the equipment.  

How Long Is a UCC Filing Valid? 

A UCC is valid for 5 years from the date of filing. After 5 years, the filing expires unless a continuation statement (UCC-3) is filed.  

When Should a UCC Continuation be Filed (“Renewed”)? 

The continuation statement can be filed within 6 months before the expiration date to extend the effectiveness for another 5 years. If the continuation isn’t filed timely, the security interest is no longer perfected by that filing. 

Do I Need to File a New UCC if My Debtor’s Name Changes? 

You don’t need to file a ‘new’ UCC, but you do need to file an amendment (UCC-3). Section 9-507(c) tells us that we have 4 months to amend our UCC filing when the debtor name changes. If not amended, the UCC filing is not effective to perfect a security interest in collateral acquired by the debtor before or within four months after the change.  

What Is a Collateral Description? What Should Be Included? 

A collateral description in a UCC filing identifies the specific assets or property that a secured party has a security interest in to secure a debt. It must be clear and specific enough to reasonably describe the collateral, which can include categories like inventory, equipment, accounts receivable, fixtures, or consumer goods. The description can be broad, such as a blanket statement covering all assets now owned or acquired in the future, or it can be specific, identifying items by serial number or location. 

Including proceeds of the collateral, such as money or property received from its sale, is also common to protect the secured party’s interest. A well-drafted collateral description helps ensure the UCC filing is accepted and effectively perfects the security interest. If the description is too vague or generic, the filing may be rejected or fail to properly secure the creditor’s rights. 

What Makes a Collateral Description Sufficient? 

Article 9-108 provides the following: 

(a) Except as otherwise provided… a description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described. 

(b) [Examples of reasonable identification.] 

Except as otherwise provided in subsection (d), a description of collateral reasonably identifies the collateral if it identifies the collateral by: 

(1) specific listing; 

(2) category; 

(3) except as otherwise provided in subsection (e), a type of collateral defined in [the Uniform Commercial Code]; 

(4) quantity; 

(5) computational or allocational formula or procedure; or 

(6) except as otherwise provided in subsection (c), any other method, if the identity of the collateral is objectively determinable. 

What Is Subordination? 

Subordination refers to an agreement where one secured creditor agrees to give another creditor priority over the collateral or the debtor’s assets. Essentially, the subordinating creditor agrees that their security interest will rank behind (or be “subordinate to”) the other creditor’s interest in terms of who gets paid first if the debtor defaults or goes into bankruptcy. 

This is often formalized through a subordination agreement, which can be used to rearrange priority among multiple secured parties. Without subordination, priority is usually determined by the order in which security interests were perfected (i.e., first in time, first in right). Subordination can help facilitate additional financing or restructuring by clarifying which creditors get paid first. 

Confident Credit Starts Here 

Navigating UCC filings doesn’t have to be complicated. With the right strategy, you can strengthen your credit decisions, minimize risk, and maximize recovery if a customer defaults. NCS Credit has been helping businesses secure their interests for over 50 years, and our team is ready to guide you through every step of the UCC process. Contact NCS Credit today to protect your rights and secure your position as a creditor with confidence.