The purpose of a Uniform Commercial Code financing statement is to protect a secured party's interest in the collateral a debtor offers for a loan by recording the relationship, according to the State of New Jersey Department of the Treasury. Filing the financing statement places the public on notice of the relationship between the debtor, the secured party and the collateral that is the security. The financing statement is known as Form UCC-1.Continue Reading
If changes occur in loan terms or collateral conditions, a secured party can amend the filed UCC-1 by filing Form UCC-3, explains the State of New Jersey Department of the Treasury. Form UCC-3 shows the updated relationship, including any change in the maturity date, terms, conditions or information in the original UCC-1. Other possible changes include terminating or assigning the obligation, or partially releasing the collateral.
A secured party who files a UCC-1 has the right to repossess the collateral listed on the financing statement if a debtor fails to repay the loan, according to the Cornell University Law School Legal Information Institute. The first lender to file a UCC-1 generally has a superior claim to the collateral if a debtor uses the same collateral to obtain a second loan from a second lender, and then fails to repay the loans.Learn more about Credit & Lending