In the complex world of business transactions, understanding the legal protections available to you is crucial. This is especially true when it comes to the Uniform Commercial Code (UCC) lien, a tool that creditors can use to secure repayment of debts. If you think that your New York business wrongly has a UCC lien due to your merchant cash advance, how can you assert your rights and protect your interests?
Grounds for contesting a UCC lien
A creditor files a UCC lien as their legal claim against a debtor’s assets to secure repayment of the debt. There are several reasons a debtor might contest a lien. These include:
- There was no proper authorization for the filing of the lien.
- The lien is based on a paid or discharged debt.
- There are other errors or inaccuracies in the lien.
Meanwhile, the process of contesting a lien usually begins with the debtor sending a demand letter to the creditor. This letter should outline the reasons for contesting the lien and request its removal. If the creditor does not respond, the next step is to file a UCC-3 financing statement amendment to challenge the lien’s validity.
Employing resolution methods
If the creditor still does not remove the lien, a debtor may consider mediation or legal action as a solution to resolve disputes. In mediation, a mediator helps the parties reach a mutually agreeable solution.
However, mediation is not always successful. If the parties cannot reach an agreement, legal action may be necessary. This could involve filing a lawsuit to have the lien removed.
Protecting your rights and interests
Contesting a UCC lien can be a complicated task. By seeking an advocate, you may navigate the legal terrain with more confidence to ensure the protection of your rights and business interests.