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Fixing UCC Lien Errors: Steps to Clear Up Filings

Fixing UCC Lien Errors: Steps to Clear Up Filings

So you logged into your state’s UCC database and found a lien filed against you out of the blue. Don’t panic! While this can be stressful, there are things you can do to resolve UCC errors and clear up improper filings. This guide will walk you through the key steps so you can get the situation sorted out.

What is a UCC Lien?

First things first – what is a UCC financing statement and lien anyways? The Uniform Commercial Code (UCC) is a set of state laws about commercial transactions involving personal property and assets. A UCC financing statement, or lien, gives a creditor a security interest in the debtor’s assets. This allows them to seize and sell the assets if the debtor defaults on a loan.UCC liens are a normal part of getting a loan for a car, equipment, etc. The lender files it to protect their investment. But sometimes errors happen and liens get filed improperly or without the debtor’s consent. This can freeze assets and hurt your credit if unresolved.

Common Causes of Erroneous UCC Liens

• Mistaken identity – The filer mixes you up with another person that has the same or similar name. This happens more often than you’d think!
• Fraud – Scammers file a fake lien to try and extort money from victims by threatening their credit. Sadly this does occur.
• Human error – A filing office employee enters something incorrectly, an account number gets transposed, etc. It’s rare but can happen.
• Abusive ex-spouses – An estranged partner spitefully puts a lien on jointly owned property during divorce proceedings. Not cool!

So how do you start fixing these UCC issues when you’ve been wrongfully liened?

Step 1: Get a Copy of The UCC Financing Statement

Start by getting a copy of the official UCC-1 financing statement from your state’s UCC filing office. This should only cost a few dollars. Review it carefully to try and figure out:

• Who filed it? Look for an individual name or business entity.
• What collateral does it list? This is important for the next steps.
• Is the information accurate for you personally? Do the SSN, address, etc. match your real details?

If it’s clearly just a case of mixed-up identity due to similar names, you may be able to resolve it with simple paperwork (more details below). But if anything seems fishy, you likely need a lawyer’s help as you may be dealing with fraud.

Step 2: Request a Correction Statement

If it appears to be an honest mistake – like they put your SSN instead of someone else’s nearly identical SSN – you can challenge the lien by filing a UCC Correction Statement. This is an official form that lets you contest the accuracy of a UCC record.You submit it to the filing office along with evidence supporting your side of the story. This gets added to the file as a counter-statement. It won’t automatically remove the lien, but it will help protect you legally if the creditor tries taking improper action against your assets.

Step 3: Dispute the Lien with The Creditor

At the same time, you should contact the creditor directly by a formal letter disputing the lien. Explain clearly why you believe it was filed improperly against you or your property. Include copies of any evidence that it’s a case of mistaken identity or fraud.By law under the Fair Credit Reporting Act (FCRA) they must investigate disputed items and fix any errors promptly. If they verify it’s valid, ask them to provide full proof and documentation of the supposed debt. Never just take their word for it!If it was an innocent mistake and you provide evidence, most legitimate creditors will release the lien right away with an apology. If they still refuse, you may need to take legal action for slander of credit or violations of consumer protection laws.

Step 4: Consult a Licensed Attorney

If you aren’t making progress on your own, your next vital step is to consult a licensed attorney that specializes in UCC law. Describe the situation and show them your evidence. They can provide expert advice on additional options, like:

• Filing a court petition to have the lien removed and records corrected.
• Reporting creditor harassment if they refuse to cooperate or keep re-filing the lien.
• Suing for damages to compensate you if it ruined your credit or blocked important transactions.

A good UCC attorney can also request the filing office remove or annotate the record based on regulations like UCC 9-518. They know how to fully protect your rights under the FCRA, Fair Debt Collection Practices Act, and other consumer laws.

Watch Out for UCC Fraud Schemes

Unfortunately there are scammers out there abusing the UCC system to try and make a quick buck. A common scheme goes like this:

1. They file a fake lien against you.
2. Then they call demanding $5,000 to remove it or they’ll ruin your credit.
3. If you pay, they keep the money and often re-file the lien anyway later.

As scary as this sounds, don’t pay them anything! That only encourages more criminal activity. Instead, report it to the authorities and follow the steps to contest the fraudulent lien.With persistence and a good lawyer’s help, legitimate victims can get fake liens overturned while the crooks usually get prosecuted. Some states are also reforming laws to crack down on UCC racketeering schemes.

Removing Legitimate Liens

For valid liens, removing them is a bit more complicated. The creditor has a legal right to keep the lien active until you satisfy the debt it secures. Even if you dispute the default amount owed, a court has to determine if their claim is valid first.You’ll need to provide strong evidence proving:

• The loan contract was invalid,
• The debt has been paid off already, or
• The statute of limitations has fully expired.

If negotiations fail, your attorney can file a “Wrongful Lien Injunction” or similar lawsuit against the creditor. But in some cases, paying settlement terms may be the only realistic option to get a proper lien removed – even if you still disagree with their claim.

Don’t Delay – Act Fast!

In summary – if you find a suspicious UCC filing against you, act ASAP! Time is critical for protecting your rights and limiting the potential damage. Follow these key steps:

1. Get a copy of the official UCC financing statement from your state’s office.
2. File a correction and dispute the lien with the creditor directly.
3. Consult an attorney if you aren’t making progress on your own.
4. Report fraud if it appears to be a scam scheme.
5. Be prepared to sue or negotiate for removal if it’s a valid lien.