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Can I enforce a UCC-1 if the debtor is in bankruptcy?

Albany, NY |

I have a UCC-1. The debtor has declared bankruptcy. The debtor is not in possession of the collateral. Can I repossess the collateral from the third party?

Attorney Answers 3


  1. It probably depends on who the third party is. If they are a bona fide good faith purchaser, then you probably cannot repossess it. However if it is a person who obtained the property in another manner you may be able to secure your rights. Since the debtor is in bankruptcy I would urge you to consult with a good experienced bankruptcy attorney. Believe it or not, if you do the wrong thing, and somehow violate the debtor's bankruptcy stay, you could get in alot of trouble. Moreover, within the bankruptcy you may have options to get your money. If the debtor has filed a 13 you are probably a secured creditor (assuming your UCC-1 filing is good) and you should file a proof of claim to get paid. If the debtor filed a Chapter 7, your secured claim will probably survive the discharge and you can collect after the case is closed.

    Contact a good bankruptcy creditor attorney in your area and good luck,


  2. To supplement Mr Kim's excellent answer, the question at issue isn't really whether the property is in the debtor's possession, but whether the bankruptcy estate has any interest at all in the property. I'm assuming that your UCC-1 and security interest are somehow involving the debtor, such as the property having belonged to the debtor. If so, just because someone else is in possession does not mean the bankruptcy estate does not have an interest. On the other hand if the debtor just owes the money and your UCC-1 and security interest are with a third party that guaranteed the debt, then generally you can go after the secured property and the third party in some circumstances, but not in others. So, again, you need a capable bankruptcy attorney to review your specific facts, documents, etc.

    I am licensed only in Texas. Offering information of a general nature in response to a question is not intended to be legal advice in your state.


  3. Yes, but you must get relief from the bankruptcy stay first. You will get it if the debtor no longer has an interest in the property.