A Uniform Commercial Code (UCC) filing is a type of legal action that a creditor takes to attach a lien to a business. This process serves as an official notice that they have an interest in the debtor's personal or commercial property.
Creditors often require businesses to put up collateral before they can secure financing. If a company can improve its credit history, then it allows them to increased opportunities to gain more credit.
UCC filings generally contain three essential pieces of information, including the name and address of both the debtor and creditor and a description of the collateral that you used to secure the loan. A UCC filing is a public record, and creditors usually publish the notice of the lien in local newspapers.
Creditors' UCC filings remain active for five years. Lenders can place liens on business assets such as equipment or property. Lenders must renew their filings to keep their interests protected past the five-year mark.
It's common for creditors to seek judgments against business owners who fail to pay back their loans. Such legal action may result in a creditor seizing money contained in a Colorado business' bank account. A judge could even permit the forced sale of your company to satisfy the debt. Many jurisdictions' laws exempt creditors from seizing your vehicle or equity in your home if their value falls below a certain amount.
If you own a small business and you're looking to secure a loan for your business or are considering buying or joining forces with another one, then it's essential to understand how UCC filings work. An experienced attorney can explain the process to you and help you determine the best course of action for your Denver business' financial future.