Business owners can face numerous challenges when dealing with lenders and UCC liens. Unscrupulous lenders can engage in abusive practices to strong-arm business owners into paying debts.
These practices can have devastating consequences for a business, including frozen bank accounts and seized assets. What forms of UCC lien abuse can business owners face and how can they protect themselves?
Common forms of UCC lien abuse
Business owners need to be aware of the different forms of UCC lien abuse to protect their companies. Lenders may use various tactics to intimidate and coerce business owners into paying debts. Among the common forms of UCC lien abuse are:
- Using overly broad lien descriptions: Lenders may use overly broad descriptions in a UCC lien, which can encompass more assets than intended. This can give lenders too much power and control over a business.
- Attempting to seize assets not covered by the lien: Lenders may attempt to seize assets that are not covered by the UCC lien, which can be a serious violation of a business owner’s rights. This can include assets such as equipment or property that are essential to the business.
- Not providing required notices of lien enforcement: Lenders may fail to provide required notices to business owners before enforcing a UCC lien. This can make it difficult for business owners to respond to the lender’s actions or protect their rights.
- Failing to terminate liens: Lenders may fail to terminate a UCC lien after a merchant cash advance (MCA) debt has been paid, which can cause ongoing problems for business owners.
The impacts of UCC lien abuse can be severe and long-lasting for business owners. It is essential for business owners to understand their rights and the laws that govern UCC liens to protect themselves from abusive lenders.
Countering lender aggression
UCC lien abuse is a serious issue that can have devastating consequences for business owners. With legal counsel, business owners may better protect their assets and companies. In addition, having legal guidance may help them level the playing field as they seek to counter lender aggression.