Collection attorneys are all fighting to get your business when a debtor has to be sued. This article reviews how to get immediate, forcible payment from a nonpaying debtor, without an attorney.
The law of New York, and most other states, gives you two weapons in order to force payment. One is the court system. The other is the secured interest, under the Uniform Commercial Code (UCC).
The UCC provides the most powerful weapon: the UCC lien notice. Once you have a secured interest from your nonpaying client, if there is any payment default, all you have to do is send a UCC lien notice to any party owing your client money. The notice immediately cuts off any payment to your client by that party and tells that party to pay you instead. It’s that simple.
This brings up two questions:  How to get the secured interest;  What to do with it if there is a default in payment.
 The secured interest is gotten by having your client sign an agreement, usually in a credit application or contract, stating that the client grants you a secured interest in their accounts and receivables. Below is a sample form that the client or prospective client has to sign, and the provision can be anywhere in a credit application or contract:
Security Interest. To secure payment to CREDITOR CO. of any sums due, DEBTOR CO. hereby grants to CREDITOR CO. a security interest in all accounts, receivables, contract rights, proceeds, and choses, or other sums due, now or hereafter acquired. Upon any default in payment DEBTOR CO. authorizes CREDITOR CO. to file a financing statement of this secured interest.
By: Officer of DEBTOR CO.
 With this provision signed, if there is the slightest default in payment, or refusal to pay, or some excuse you don’t want to swallow, you can send out a UCC lien notice to any person or party that owes your client money, except their bank. Anyone in your office can prepare the UCC lien notice and send it. The question is: how do you find out who to send it to? Certain businesses get paid by certain institutions. Medical practices get paid by health insurance companies. Internet sales companies and retailers get paid by credit card processors. Building trades companies frequently list their current projects in their web sites. In NYC, they file their jobs on the DOB’s web site. Factors always file financing statements and their identities then become public records.
Rest assured that if you use this weapon and your client’s cash flow is cut off with a UCC lien, they will come running to settle, because there is no real remedy under the law to get rid of the lien. The only possible remedy is for them to bring a legal action requesting an injunction to avoid the lien, but in order to get the injunction, they have to post a bond for the amount of the debt.
So, what’s the deadlier tool:  plodding through the court system with a lawsuit forcing you to incur an attorney fee; or  a secured interest, letting you instantly send a UCC lien notice any time you want, at no cost?