A creditor can protect itself from collection risk by having its customer grant the creditor a security interest in the customer’s assets to secure obligations owing to the creditor.

To perfect the security interest, the creditor usually must file a financing statement according to Article 9 of the Uniform Commercial Code (UCC), as adopted in the applicable state where the creditor is filing the financing statement. UCC Article 9’s requirements are intended to ensure that the financing statement sufficiently identifies the debtor and the pledged collateral so as to put other potential creditors on notice of the existence of the security interest.

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