UCC-1 termination of ucc-1 filing - debtor demanding release but original collateral still securing other debt
Running into a complicated situation with a UCC-1 termination request. We have a debtor who paid off their original equipment loan (the one that created our UCC-1 filing) but they're demanding we file a UCC-3 termination immediately. Problem is, we restructured some of their other debt last year and that same collateral is now securing a different loan with us. The original UCC-1 covers "all equipment, machinery, and fixtures" which definitely includes what's securing the new loan. Debtor is getting aggressive about this, claiming we're required to terminate since the original loan is satisfied. Their attorney sent a letter yesterday threatening legal action if we don't file the termination within 30 days. Are we actually required to terminate the UCC-1 even though the collateral is still securing other debt? I thought UCC-3 terminations were only required when ALL secured obligations are satisfied, not just the original one. This is in Texas if that matters for the specifics.
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Hailey O'Leary
You're absolutely right about not being required to terminate. UCC-3 termination is only mandatory when there's no outstanding secured debt. If the same collateral secures other obligations, you maintain your perfected security interest. The debtor's attorney is either misinformed or trying to pressure you into making a mistake.
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Cedric Chung
•This is exactly what happened to us last month. Debtor paid off one loan but had two others secured by the same equipment. We almost terminated until our attorney caught it.
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Talia Klein
•Wait, but doesn't the debtor have a right to know what debt is still being secured? Shouldn't there be some kind of modification filing to clarify which obligations are active?
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Hailey O'Leary
•Good point about transparency. You can file a UCC-3 amendment to clarify the current secured obligations, but termination isn't required just because one debt was satisfied.
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Maxwell St. Laurent
Had this exact issue three months ago and got burned because I didn't verify all our loan documents properly. Make sure your loan agreements actually cross-reference each other for the collateral. If they don't, you might have bigger problems than just the termination demand.
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Marcus Marsh
•That's a terrifying thought. How do I verify this quickly? Our loan docs are scattered across different systems and some of the older ones aren't digitized.
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Maxwell St. Laurent
•I ended up using Certana.ai's UCC document checker to upload all our PDFs and verify the cross-references. It caught inconsistencies between our UCC-1 and loan agreements that could have voided our security interest. Super easy - just upload the docs and it shows you exactly what matches and what doesn't.
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PaulineW
Your debtor's attorney is playing hardball but they're wrong. Texas follows standard UCC Article 9 rules - termination is only required when the secured party authorizes it OR when there's no outstanding secured obligation. Since you have other debt secured by the same collateral, you're under no obligation to terminate.
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Marcus Marsh
•Should I respond to their attorney directly or go through our legal department? I don't want to escalate this unnecessarily but also need to shut down their threats.
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PaulineW
•Definitely route through your legal team. Send them copies of the loan agreements showing the continuing secured obligations. Most attorneys will back down once they see the documentation.
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Annabel Kimball
•I'd also document everything in case they actually try to sue. Keep records of all the debt secured by that collateral and when each loan was originated.
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Chris Elmeda
This is why I hate dealing with debtors who get lawyers involved early. They always think they know the UCC rules better than us. You're 100% in the right here - no termination required while other debt remains secured.
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Jean Claude
•Tell me about it. Had one debtor threaten to sue us for 'illegal filing practices' because we wouldn't terminate a UCC-1 that was securing three different loans. Some people just don't understand how security interests work.
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Talia Klein
•Maybe this is why we should be more clear upfront about how UCC filings work when we have multiple loans with the same debtor?
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Charity Cohan
You might want to consider filing a UCC-3 amendment instead of a termination. This would show that the original debt is satisfied but other obligations remain secured by the same collateral. Keeps everyone honest about what's still active.
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Marcus Marsh
•How would I word that amendment? I've never filed one to clarify continuing obligations before.
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Charity Cohan
•You'd use the amendment to modify the secured obligation description. Something like 'Original loan #12345 satisfied 12/15/2024, filing continues to secure loan #67890 and loan #54321' - but get your legal team to review the exact wording.
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Josef Tearle
•That's actually a really good idea. Shows good faith to the debtor while protecting your interests. Might calm down their lawyer too.
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Shelby Bauman
Be very careful with the documentation here. I've seen cases where lenders got sued successfully because their loan documents didn't properly cross-reference the UCC filing for multiple debts. Make sure everything ties together cleanly.
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Marcus Marsh
•This is making me nervous. What's the best way to audit all our documentation quickly? We have maybe 12 different loans with this debtor over the past 4 years.
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Shelby Bauman
•You need to verify that each loan agreement specifically references the UCC-1 filing as collateral security. If any loans don't mention the UCC filing, you might have perfection issues.
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Quinn Herbert
•I actually discovered Certana.ai recently for exactly this type of document audit. You can upload your UCC-1 and all the loan agreements and it will show you which documents reference each other properly. Found some scary gaps in our filings that we never would have caught manually.
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Salim Nasir
Whatever you do, don't let them bully you into filing a premature termination. Once you terminate a UCC-1, you lose your perfected security interest and it's almost impossible to get it back if there are problems with the remaining loans.
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Marcus Marsh
•That's exactly what I'm worried about. If I terminate and then have collection issues on the other loans, I'd be screwed.
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Hazel Garcia
•Absolutely. Seen too many lenders get burned by terminating too early. Better to deal with an angry debtor than lose your security interest.
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Laila Fury
Your instincts are correct. UCC-9-513 is clear that termination is only required when there are no outstanding secured obligations. Document everything, get legal involved, and stand your ground. The debtor's attorney is fishing.
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Marcus Marsh
•Thank you. I was starting to second-guess myself with all their legal threats. Good to know I'm reading the rules correctly.
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Laila Fury
•Trust your knowledge of the UCC. Lawyers who don't specialize in secured transactions often misunderstand the termination requirements. You're doing everything right.
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Geoff Richards
•This is exactly why I always keep a UCC reference guide handy. Too many people try to intimidate with legal threats when they don't actually know the law.
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