What is the purpose of filing a UCC financing statement?
A financing statement is a document stating that an entity/individual (secured party) has a claim (security interest) in certain property (collateral) belonging to another entity/individual (debtor). For example, a business owner borrows money from a bank and uses the assets of a business as collateral for the loan. The bank as the “secured party” will most likely file a financing statement with the UCC Office within the Division of Corporations. By filing a financing statement, the bank establishes its priority over the collateral in the event the business owner files for bankruptcy or becomes insolvent. The filed financing statement gives notice to anyone who might be interested that the secured party has a “perfected security interest” in the business’ assets. If other secured parties file financing statements naming the same debtor and collateral, the date of filing sets up a priority for payment on a first in time basis. Typically, a person would not file a UCC financing statement
