HOW TO REMOVE A UCC LIEN
Are you dealing with a UCC lien that was filed against your business? Many business owners, who are just trying to keep their companies afloat, discover that a Uniform Commercial Code (UCC) lien can put a strain on their operations. Regardless of whether you’re a small operation, or a larger one, this article aims to help you understand how to remove a UCC lien, and what the potential penalties or crimes might be if things go wrong.

What Is a UCC Lien?
A UCC lien is a legal claim that was placed on your business’s assets, usually because a creditor gave you financing. If you borrowed money to help with cash flow, or used equipment financing to buy important machinery, you likely signed an agreement that let the lender file a UCC-1 Financing Statement. That statement, which is publicly accessible, notifies other parties that the lender has an interest in your property or other assets. If you fail to pay back what you owe, the lender can seize those assets. This is why a UCC lien is serious, and it can affect your ability to secure new funding.

When you have a UCC lien that was improperly filed, or if you have paid off your debt in full, there is usually a procedure to get that lien removed. Paying off the debt will free up your business, so you can move forward. Once your debt is cleared, you often want to file a termination statement to formally remove the lien. The consequence of ignoring the lien is that it can stay on your records, even though you paid the debt.

Why UCC Liens Matter
Creditors who lent you money place UCC liens to secure themselves in case you stop making payments. A UCC lien that was properly filed ensures the creditor can take specific assets to recover their losses. This type of lien can also appear on your business credit report. That can reduce your credit score and scare off potential lenders who see you as a risk. If they think you have too many debts, you might be declined for new financing.

No one wants to face a scenario where their equipment is seized. That is the ultimate consequence of leaving a valid UCC lien in place without taking action. A merchant cash advance provider, a bank, or other lender who is owed money will take steps to collect if you are in default. In such a situation, your entire business could be disrupted or forced to close.

Different Types of UCC Liens

• Specific Collateral Liens: A lien that was filed against a particular asset, like a piece of machinery or a company vehicle.
• Blanket Liens: A lien that covers nearly all of a business’s assets. If you default, the creditor can go after your real property, inventory, accounts receivable, and more.

Both types can cause major headaches. Either way, now – you should be aware that removing these liens often requires a direct conversation with the lender who was involved.

The Legal Aspects You Should Know
Many states have laws, which you can find on the official websites of your Secretary of State, explaining how to file a termination statement. That form notifies the Secretary of State that the debt was paid, or that the lender no longer has a claim on your assets. You can also visit https://www.sba.gov for information on UCC filings and small business regulations.

Penalties if You Remove a UCC Lien Improperly
Some people might attempt to remove a UCC lien by filing false statements or forging documents. This is a risky move that can lead to criminal charges. If you lie on an official document, you could be charged with a crime that carries penalties like fines, probation, or even jail time. The consequence of such actions is severe because any court, which sees that you filed a fraudulent document, may issue heavier penalties or fines.

• Potential Fraud Charges: Submitting a false form, such as a forged termination statement, may be prosecuted as fraud.
• Perjury Claims: Many states treat lying on official forms as perjury. If you face such charges, it can harm your entire future.
• Civil Lawsuits: If a creditor suffers harm because you fraudulently removed a UCC lien, they might sue you for damages.

No lender wants you to end up facing these penalties. Yet, if you try to erase a legitimate lien without following the correct steps, that is exactly what might happen.

Penalties for Ignoring the Lien
On the other hand, if you simply choose to do nothing about a UCC lien that was properly filed, that can lead to more consequences. A valid lien remains in force for five years, and if the lender renews it, the lien might stay around even longer. Creditors who see your UCC lien might treat you like a high-risk borrower.

Ignoring the lien can also trigger lawsuits. If you default on what you owe, and there is a valid UCC filing, the lender may seek a judgment. That judgment might allow them to seize collateral. If your assets are seized, you lose the ability to operate efficiently. The direct consequence could be losing employees, failing to serve your clients, and in the worst-case scenario, going out of business.

Defenses and How We’d Handle Your Case
We are DelanceyStreet.com, a top tier business debt relief company based out of NYC, that helps clients nationwide. If a UCC lien was filed against you incorrectly, or if you already paid off your debt, we may be able to help remove the lien. Our approach is simple but effective:

1. Review the Existing Documents
   We look for any sign that the UCC filing was invalid or that it no longer applies. This includes checking your payment records, your contract terms, and any notices of default you may have received. If evidence that was improperly recorded exists, it will be thrown out. The consequence is that your lien could be removed entirely, restoring your creditworthiness and giving you the freedom to grow.

2. Negotiate with the Creditor
   Sometimes, a creditor who was not aware you paid the debt leaves the lien in place. If you have proof, we can contact the lender directly and request they file a UCC-3 termination form. If the creditor refuses, we may consider legal action. The consequence of them refusing is that you might suffer financially, so we act swiftly.

3. File a Correction Statement
   If a UCC lien was false, or if it should never have been recorded, we can help you file a correction statement with your state’s Secretary of State. This filing clarifies that the creditor’s claim is invalid or inaccurate. The consequence of filing a correction is that your business record can be cleared, allowing you to seek new financing.

4. Litigation if Necessary
   Creditors who refuse to cooperate might face a lawsuit. If you can show that the UCC lien is harming your business, or that you fully satisfied the debt, you have grounds to ask a court to remove it. Litigation can be expensive, so we try to resolve the matter without filing a lawsuit. If it comes to that point, we advocate for your rights at every stage.

Criminal Consequences to Watch Out For
If someone attempts to remove a UCC lien in a dishonest way, they risk facing criminal charges. Evidence that was fraudulently created can also cause major liability. A judge who sees that you committed fraud might impose additional penalties. This can include restitution, which requires you to pay money to the lender for any losses, plus court costs. If you face these problems, it’s essential to hire an experienced team.

At DelanceyStreet.com, we know how to protect you. Our firm is owned by an attorney who was admitted to practice in federal court, which means we can handle complex legal matters. If you’re accused of forging documents or lying on a UCC filing, we can help craft a defense strategy. The consequence of not defending yourself properly can be devastating, since these accusations can lead to criminal records, large fines, and the loss of your professional reputation.

Strategies We Recommend
Research: Look up your lien through your state’s official website. Many states let you search for UCC filings online. If you believe the filing is inaccurate, gather all your loan documents, emails, and payment statements. Evidence that was thorough, such as bank transaction records, helps us build a strong case.

Communication: Often, creditors are willing to remove the lien if you paid off your balance. No lender wants you to remain trapped if the debt is truly resolved. Speak to them, or let us talk to them on your behalf.

Correction Statement: A correction statement that was filed through the Secretary of State’s office can alert others that the lien is invalid. Check with your state’s guide on how to file a correction. You can find these instructions at the official website of your Secretary of State or a relevant government agency.

Termination Statement: Once your debt is paid, you want to push the creditor to file a termination statement. If they refuse, you might have to do it yourself. The consequence of delaying is that you might miss out on business opportunities, lines of credit, or better financing rates.

What Are the Consequences of Not Addressing a UCC Lien?
You may see your business credit score drop. Some financial institutions may reject your application if they notice an active lien, because it signals a higher risk. In addition, you might find yourself paying higher interest rates. The cost of inaction can be huge, because high interest rates lead to more debt. That debt can spiral, so ignoring this problem can push you closer to default.

Can Removing a UCC Lien Lower the Risk of a Lawsuit?
Yes, removing an invalid lien, or one that was already paid, often prevents creditors from attempting to collect on a debt that no longer exists. If a creditor tries to sue you anyway, proof that you obtained the proper lien termination can help you defend yourself in court. The consequence of lacking that paperwork is that you might be stuck paying expensive legal fees.

Get Guidance from DelanceyStreet.com
Business owners who are dealing with a UCC lien need a straightforward solution. We understand that too much debt can stifle your cash flow. When you’re in that type of predicament, you want to move quickly. Our team knows how to evaluate your contracts, your repayment history, and all of the relevant laws so that we can craft a plan that gets the results you need.

We also help you stay clear of shady tactics. Some questionable companies might promise to remove your lien fast, but they might push you to file incorrect paperwork. The consequence of following bad advice is that you could face criminal or civil penalties, and that is a risk no one wants to take.

Helpful Resources and Government Sites

• Official SBA Website (SBA.gov): Learn about various financial products, including guidelines on secured loans.
• USA.gov: Official portal for U.S. government services, where you can find links to federal and state resources.
• Your State’s Secretary of State Website: Search for your UCC filing and find the forms you need to remove the lien.