Tips from a New York City Collection Attorney: Selling on Terms Makes You a Lender. Here’s How to Act Like One.

Tips from a New York City Collection Attorney: Selling on Terms Makes You a Lender. Here's How to Act Like One.Are you selling goods or equipment to your customers on terms? If the answer is yes, you are financing the purchase, you are a lender.

As a lender, you should do more than sit back and wait for payment to arrive. One of the ways you can insure the best possible chance of getting paid is by taking a security interest in the goods or equipment that you sold. You need not have an official financing or leasing company to do so. Consider a bank’s process when lending to a business. The bank will take an interest in the assets of the business as well as the assets of the owner as collateral. The bank will not lend without security. Your New York City collection attorney would recommend you don’t either.

Many commercial situations and circumstances enable the supplier of goods, equipment or those financing the acquisition to secure their interest. The “security” or interest is in the goods or equipment.

At the time of the transaction, the creditor would have their customer sign an agreement allowing the creditor to file a financing statement, a UCC-1 Statement. The statement, when filed properly, puts the public on notice that you have a security interest in specified assets of your customer’s company. The assets are not to be transferred to a third party without your interest being satisfied, paid, or without your consent.

The information on the UCC must be completely accurate to make sure your lien comes up when the customer’s corporate entity is searched. If the name of the borrower is incorrect on the form, your lien is invalid. Similarly, proper filing and renewal of the UCC financing statements are a must. Every state has specific requirements as to when and how to file. You must be exact and conform to the requirements. The filing fee is nominal and a great investment.

Your customer will sign the agreement so you can file the UCC. It is routine and commonplace. By securing the UCC, if your customer does not pay, you may make an application to the Court to reclaim your goods, if you so desire.

FFGN, New York City collection attorney’s, represents leasing companies that routinely file UCCs. When customers fail to pay, the clients send an investigator to debtor’s place of business. The investigator confirms that the equipment is the identical equipment originally sold to the debtor.

FFGN then makes an application to the Court to get the equipment back. Often our clients are able to get the equipment back, resell it (at a lesser amount) and recoup something on the debt. This way our clients are able to collect from debtors who may not have the ability to pay. Without the UCC, our clients wouldn’t be able to do this and would be out a lot more money.

Where can you find the UCC form? You can retrieve it here.

Need help “perfecting” your interest in goods or equipment, collecting past due balances? Contact this New York City collection attorney at (212) 686-0100 or email Jocelyn directly at, we will get you paid.

[Blog-Tips form NYC Lawyer]