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13 Jan 24

UCC Lien Release Demand Letters: Tips and Templates

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Last Updated on: 15th January 2024, 10:26 am

UCC Lien Release Demand Letters: Tips and Templates for Getting Liens Removed

Let’s talk about lien release demand letters – what they are, when to use them, tips for writing effective ones, and sample templates to help get those pesky liens cleared off your record.
I’ll try to keep it simple and conversational, like we’re having a chat over coffee. I’m not a lawyer, just a regular Jane who has dealt with more than my fair share of UCC liens!

What is a UCC Lien?

A UCC lien (or Uniform Commercial Code financing statement) allows a creditor to stake a claim on your personal property as collateral for a loan or unpaid debt. It’s kind of like them putting a temporary sticky note on your stuff saying “Hey this belongs to me if you don’t pay up!” 1
No bueno when it starts interfering with your ability to sell assets or get additional financing.

When Would You Need to Send a Lien Release Demand Letter?

Common reasons include:

  • You paid off the debt but the creditor hasn’t released the lien
  • The debt related to the lien was discharged in bankruptcy
  • The lien was filed erroneously or fraudulently
  • The statute of limitations has expired on collecting the debt

I’ll dig into the details on each scenario more below.

Tips for Writing an Effective Lien Release Demand Letter

Writing these suckers is part law, part art. Here are some tips I’ve picked up for making them more likely to get results:

  1. Get the creditor’s full legal name and contact info – Confirm it with the state UCC records
  2. List the file number, date, and place of filing for the financing statement
  3. Get right to the point clearly stating what you want – the lien terminated and financing statement released
  4. Provide the legal basis for your demand whether it’s paid debt, expired SOL, etc.
  5. Include copies of any supporting documents – payment receipts, court orders, etc.
  6. Be firm but polite – no rants or accusations
  7. Set a reasonable deadline for them to comply (30 days is common)
  8. Note that noncompliance may force you to take legal action

Of course, whip up some samples…

Lien Release Demand Letter Templates

Template #1 – Debt Paid But No Lien Release

Use this template if you paid off the debt tied to the lien but the creditor hasn’t released it.

[Your Name] [Your Address] [Date] [Creditor Name] [Creditor Address] Re: Demand for Release of UCC Financing Statement [File #] Dear [Sir or Madam/Creditor Contact Name],
On [date] I satisfied in full my outstanding debt owed to [Creditor Name] in the amount of [dollar amount] related to [type of debt].
As evidence of my payment, I have enclosed copies of [payment receipts, cleared checks, etc.].
Despite fully paying this debt on [date], you have failed to release the UCC Financing Statement [UCC file number] filed on [date] with the [Name of State] Secretary of State’s office.
I hereby demand that you immediately file a UCC Financing Statement Amendment (Form UCC-3) with the [State] Secretary of State to terminate and release the above-referenced financing statement within the next thirty (30) days.
If I do not receive confirmation of the financing statement release by [date 30 days from letter date], I will have no choice but to pursue legal action. I look forward to your timely cooperation.
Sincerely,
[Your name and signature]

Pretty solid, yeah? Adjust with your specifics obviously – lien file deets, state agency, language about your proof of payment, and dates.
You could even attach copies of the payment evidence just to really nail it shut.

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Template #2 – Lien Release After Bankruptcy Discharge

If the debt tied to the lien was wiped out in bankruptcy, send something like:

[Your Name] [Your Address] [Date] [Creditor Name] [Creditor Address] Re: Demand for Release of UCC Financing Statement [#] after Bankruptcy Discharge
Dear [Sir or Madam/Creditor Contact Name],
As you are aware, on [date of discharge] I received an Order of Discharge from the U.S. Bankruptcy Court [district] under Chapter [7 or 13] of the Bankruptcy Code.
This Order eliminated my personal liability on all dischargeable debts, including the debt owed to [Creditor Name] secured by the UCC Financing Statement [UCC #] filed on [date] with the [State] Secretary of State.
As the underlying debt has been discharged, I demand that you immediately file a UCC Financing Statement Amendment (Form UCC-3) with the [State] Secretary of State to terminate and release the above-referenced financing statement within the next thirty (30) days.
Please find enclosed a copy of my Bankruptcy Order of Discharge.
If I do not receive confirmation of the financing statement release by [date 30 days from letter date], I will seek relief from the Bankruptcy Court, including possible contempt proceedings for violation of the discharge injunction under 11 U.S.C. §524(a)(2).
I look forward to your timely cooperation.
Sincerely,
[Your name and signature] Enclosure: Order of Discharge

Pretty self-explanatory – swap in your specifics about the bankruptcy case, lien details, timeline, etc.
The key piece is including a copy of the discharge order with the first page visible. That really drives home that Ch. 7 erases all dischargeable debts or Ch. 13 eliminates them upon payment of what the court approves.
And no creditor wants to tangle with possible contempt charges!

Template #3 – Lien Release for Expired Statute of Limitations

For liens tied to zombie debt that’s beyond the statute of limitations for collections in your state, try:

[Your Name] [Your Address] [Date] [Creditor Name] [Creditor Address] Re: Demand for Release of UCC Financing Statement [#] Dear [Sir or Madam/Creditor Contact Name],
On [date of last payment], I defaulted on my debt obligation to [Creditor Name] secured by the UCC Financing Statement [UCC #] filed on [date] with the [State] Secretary of State.
As you know, [State] has a [##] year statute of limitations period for debt collection activities under [cite state law]. As my last payment or account activity was over [##] years ago on [date], any collection remedies related to this debt have expired.
Despite the statute of limitations barring collection legal action, you have continued to keep the above-referenced financing statement active to my detriment.
As the statute of limitations has eliminated your debt claim, I demand you immediately file a UCC Financing Statement Amendment (Form UCC-3) with the [State] Secretary of State terminating this expired financing statement within thirty (30) days.
Failure to release this expired lien may force me to consider legal claims against [Creditor Name] for violations of consumer protection laws. Please promptly file the UCC-3 termination statement by [date 30 days out].
I look forward to your timely cooperation.
Sincerely,
[Your name and signature]

Pretty straightforward – plug in the specifics on your state’s statute of limitations for debt collection, lien details, timeline of defaulted payment vs SOL expiration, etc.
I threw in a gentle reminder that dragging their feet could lead to FDCPA litigation. No need to break out the threats too early though!

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What Happens After You Send the Lien Release Letter?

You likely won’t get an immediate confirmation that the UCC termination statement was filed. But do follow up on or soon after the deadline you gave them to comply.
Check your state UCC records online to confirm the lien release. If not filed, you may unfortunately need to repeat demand letters or look into legal options with a consumer protection attorney.
But hopefully the initial salvo does the trick! Jolly cooperation all around and you get the lien monkey off your back.
Let me know if you have any other questions – happy to chat more! And good luck getting clear title to all your stuff again. 😉

Citations

  1. What is a UCC Financing Statement? UpCounsel. https://www.upcounsel.com/what-is-a-ucc-financing-statement