Can an UCC lien take money from your bank account?
A UCC lien that was filed by a lender might seem scary – most people don’t even know what it is, until it bites you. It can affect your business assets, like your equipment, and sometimes even your bank account. The purpose of the UCC lien is to get in the way of your business, in case you decide not to repay your debt. Today, we’re going to talk about what a UCC lien is, how it might allow a lender to reach your funds, and how DelanceyStreet.com can help you defend yourself. We’re a top tier business debt relief company based out of NYC, and we help clients nationwide. This is not legal advice. It’s general information about a topic that can seriously impact your small business.
What Is a UCC Lien and Why Should You Care?
A UCC lien that was placed on your business refers to a legal claim under the Uniform Commercial Code (UCC). You can find the official text of the UCC on Cornell Law School’s website, or check your specific state’s regulations, like the New York UCC code. The UCC rules let creditors secure their interest in property or assets that belong to you, like your machinery, like your inventory, or like your bank account.
A UCC filing that was recorded by your creditor gives the lender a claim on certain assets you own. This means if you default, or fail to repay, the creditor might use the lien to pursue your property. If a lender gets a court judgment, that can lead to money being taken from your bank account. This could result in your inability to pay your employees or buy important supplies.
How Does a Creditor Actually Access Your Bank Account?
A creditor who was granted a default judgment might enforce that judgment by garnishing your finances. You can read more about garnishment and your rights at the Consumer Financial Protection Bureau (CFPB) website. Once they have a legal order, the creditor can ask the bank to freeze or withdraw funds. This means the money you rely on could suddenly disappear.
This is serious. If your money is seized, your business might lose the ability to operate. That could lead to missed payroll, late rent payments, or even a total shutdown of business operations.
Are There Penalties or Crimes to Worry About?
You might think if you can do something shady—like hiding your assets—to escape the lien. That can be risky. A business owner who was trying to hide money might face accusations of fraud. Fraud is a serious offense. If there’s enough evidence, it can lead to big fines or even time in jail. Never misrepresent your finances, because false information can spark criminal charges. A fraud charge that was confirmed by a court could haunt you, and it might shut down your future opportunities to borrow money.
How We Defend You: Strategies That Work
Delancey Street’s team focuses on business debt relief, and we can help your business figure out a plan if you’re dealing with a UCC lien. Our sister law firm, led by one of the owners at Delancey Street, can help if you’re being threatened with legal action. All clients of Delancey Street benefit from the services of our founding partner whose an attorney, and our sister law firm.
Below are some approaches we work and help you:
- Settlement Negotiation: A lender who was paid a portion of what is owed might agree to let you out of the lien. Sometimes, that means you avoid garnishment. We handle this process for you.
- Debt Consolidation: One merchant cash advance consolidation that was structured properly can reduce multiple loans into a single, more manageable payment.
- Refinancing: A new loan that was designed to pay off your existing debts could free you from a high-interest MCA or predatory loan.
- Legal Defense: If a lawsuit is in progress, you may need an attorney to argue why the UCC lien is flawed.
What Happens if You Don’t Defend Yourself When There’s a UCC Lien At Play?
Many people ignore the ucc lien, hoping it just “goes away.” That can cause real trouble. Here are some common outcomes:
- Bank Account Seizure: Money might be taken without warning, causing bounced checks and angry suppliers. This can shut down your ability to do business.
- Asset Seizure: If you have equipment, a creditor who was granted the right may repossess it.
- Credit Damage: Defaulting on debts and having a lien enforced will appear on your credit record. This could block future financing.
- Lawsuits and Judgments: A single lawsuit can spiral. A judgment that was finalized may allow the creditor to garnish your wages, attach liens to your property, or collect from personal assets like your home.
All of these consequences hurt your business in the long run.
Penalties for Lying to the Court or Lender
If you submit false documents or mislead your lender, you could face legal actions. A false statement that was proven in court can lead to fines and, in some cases, jail time. Lenders are often quick to pursue fraud claims if they believe a borrower has hidden assets or lied on purpose.
We Can Help You
Regardless of your situation, DelanceyStreet.com is here to guide you. We bring decades of experience in business debt relief. We pride ourselves on open communication with creditors, showing them it’s in everyone’s best interest to reach a fair resolution. Our advisors can help you:
- Gather financial documents
- Speak to lenders
- Develop a long-term solution
- Prevent more aggressive legal actions
We strive to reduce your overall debt, negotiate better terms, and protect you from worst-case scenarios. Let us be your advocate. We can help you move beyond a UCC lien, so you can focus on growing your business.
Don’t Forget: Consult with a Lawyer
This article is not legal advice. It’s important you speak with a licensed attorney who understands your specific situation. If you have a pressing issue, reach out to someone who is qualified in your state. The attorney who was designated on your case can explain local laws and represent you if you get sued.