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Can you remove a UCC filing yourself after repayment?

On Behalf of | Mar 6, 2024 | UCC Liens

As part of your agreement to acquire a secured loan, the lender likely filed a UCC-1 against your business with the New York secretary of state. Consider it a safety measure for the lender, allowing them to claim interest on the assets you pledged as collateral. The problem is that UCC filings sometimes remain even after a debtor fully repays a loan.

Although they do not necessarily harm your business, a lingering UCC filing may have consequences. It is more than just a nuisance. An active UCC lien may limit your ability to sell company equipment or obtain future financing.

It is reasonable to expect that the lender will take down the UCC filing once you have settled your debts, right?

Taking charge of UCC filing removal

Unfortunately, not all lenders actively remove a UCC filing. Some lenders wait for payment to clear, require a written request or simply overlook the lien.

After repaying a debt, it may help for you to immediately request a UCC-3 filing to remove the lien. This can spare you from unnecessary complications later on. The lender has 20 days to take action. If you do not receive an update, you may file a UCC-3 termination statement.

However, there are some risks to filing on your own. There are strict processes to follow and potential complications that may arise. Having legal counsel on your side could be beneficial. An attorney experienced in UCC liens can review your documents and guide you. Their insights may allow them to foresee possible issues that might affect your operations.

UCC liens can touch many parts of your business. Being proactive may allow you to avert or handle potential legal issues without escalating them, ultimately protecting your company.