Tag Archives: UCC

Uniform Commercial Code (UCC) – NOT a Key to Debt Defense – Myths and Facts about the UCC

Many people think that the Uniform Commercial Code (UCC) offers consumers special protections from debt collectors. It does not.

Like the Strawman theory, the U.C.C. is a slender reed to support your hopes of avoiding or defeating creditors and debt collectors. Because in fact it does essentially nothing to help. We’ll discuss the U.C.C. and then tell you what you should be doing instead of tripping over strawmen below.

What is the Uniform Commercial Code?

Most people think of themselves in terms of their nationality (i.e., “I’m American). While most Americans do know that states have different laws , our daily lives rarely expose us to these different laws and their consequences.

It wasn’t always that way, though. Up until the 1930s, perhaps, state laws had priority in most people’s lives, and those laws could vary widely. It could be hard to know where to sue someone or what laws applied to specific actions. And that’s still true, to an extent, but. Since the 1930s, however, it has been progressively less true. The federal government has grown in size and function. Also, the states have sought uniformity in their laws because there is so much interaction between their citizens.

Part of the reason the states have worked together more smoothly has been the UCC.  What happens is that some think tank convenes a task force and asks it to codify existing (state) laws and make recommendations as to where those laws might be changed to become more uniform or fairer.

There’s a good reason for this. Laws can grow like weeds, and bringing uniformity to them can help people plan so they can know what to do.

Who Made the U.C.C.?

Two nongovernmental legal organizations created the U.C.C. These are the National Conference of Commissioners on Uniform State Laws and the American Law Institute.

The UCC, standing alone, has no legal authority or power at all.

That isn’t to say the UCC is not significant, but it is a document created by a bunch of academics and has no independent force or impact on anybody. So in a sense, when anyone says the U.C.C. does anything (at all), they’re wrong. It does nothing.

Why the U.C.C. Matters

So why is the UCC a big deal?

It’s a big deal because all the states have adopted some portions of it. But not all states have adopted the same parts of it. You see, the drafters of the UCC knew that states had different laws on certain things – laws that had evolved over time and not accidentally. The UCC was designed to help legislators bring order to what was there, not force them to have the same laws.

Remember, legislatures make laws, not think tanks.

If parts of the U.C.C. have become law in your state, they will be reflected in your state laws. You should look for the law in your state laws and not the U.C.C. itself. Likewise, I trust you can see that since the portions of the UCC that were adopted are just part of your state law they do NOT trump other laws and have no special, magical power. Likewise, as state laws they do not trump federal laws.

U.C.C. was Written for Business

The drafters of the U.C.C. were mainly concerned with the rights and duties of businesses towards each other. They were much less concerned with consumers.

That makes sense, and I mean no criticism by the statement. After all, it’s the “commercial” code. It was designed to regulate the way businesses make contracts or treat breaches of contracts. It’s purpose was only coincidentally people friendly. That is, the drafters believed that if businesses run more smoothly, they will improve everybody’s standard of living. That makes sense, doesn’t it?

On the other hand, the drafters were much less concerned about consumer rights against business. They knew that there was another body of law governing consumer rights.

UCC’s Impact on Debt Collectors

The U.C.C.’s impact on debt collectors is almost zero. Again, this is not a conspiracy. It’s just that debt collectors rarely engage in “commercial” law regarding debtors. They buy the accounts, of course, and the U.C.C. will say something about the way those transactions between original creditor and debt buyer operates. But the essence of debt collection is that the debt collector has nothing to do with the purchase of goods.

Two Small Exceptions

There are a couple of small exceptions to that statement. First, if you bought property or a service from an original creditor and rejected it,  your state’s version of the U.C.C. will tell you what to do with the inadequate goods. It could give you certain types of liens as well. Second, if you have rights against the creditor, the U.C.C. may provide for their transference to the debt collector. That is, if the original creditor breached its contract with you, you may be able to sue the debt collector who buys the debt. Federal law requires that states have this law, but the U.C.C. might have some related protections.

Help for People Harassed or Sued by Debt Collectors

When people say “the U.C.C. does this or that,” or “requires this or that,” they’re showing you they do not really understand the law. Don’t look to these people to tell you how to beat the debt collectors.

You CAN beat the debt collectors in many cases, and without even having to hire a lawyer – but your solutions will most often be in consumer protection laws like the Fair Debt Collection Practices Act or Fair Credit Reporting Act, or in the normal rules of the court.

We help you do that.

Debt Defense – How NOT to Defend Yourself from the Debt Collectors

Debt defense is a learning process, but it requires effort. And if you are looking for help, common sense is helpful. I received the following email from a person with whom I had never spoken before:


Our court trial date is [a date 5 days from the date of email] in [City], California.

We have been sued by Midland Funding LLC. We filed a general denial claim last year.

The 17th of May, fed ex delivered a package from [the debt collector plaintiff] which had a Declaration In
Lieu of Testimony in it.

First of all, in court will I be allowed to read my research?

Second, we have not received notification … like they claim and when we were served last year, I called them and tried to take care of the debt but they kept putting me off.  No one wanted to talk to me about it.  I called them many times and each time they would tell me to call another time.

Third, …

Next, …

Next, …

There are quite a few things that I have questions about.

I cannot afford an attorney or I would let one take care of this for me.

Can you give me any advice?

The above letter, which has been changed to protect identities, was actually sent to me. While I sympathize with the person sending it, it reveals many things you will want to avoid if you hope to win a lawsuit against a debt collector.

You Can’t Waste Vast Amounts of Time

First let me point out that this letter was sent on Friday night, six days before the date apparently set for trial. The lawsuit was filed last year, and this person received pretrial materials a month ago. You MUST NOT WAIT so long before taking action to protect yourself. The letter asks numerous significant questions – some of them good questions, incidentally – and the writer seems to think the answers will enable her to defend herself.

Debt Defense is a Process, not Magic Words or Questions

Debt defense is a process. As I have often explained, you want to get started early, so that the debt collector has plenty of opportunity to give up. Also, it takes time to ask for and get the facts you need, more to understand them, and yet more to make sure you can get the judge to understand. You can’t treat questions as a magical way to win the suit. Facts win suits, and you must do the work to show what the facts are.

It also takes time to learn the law and become familiar enough with it to use it.

This person wasted a solid year before looking for the easiest way out a few days before trial. At this stage, one might be able to get lucky. The debt collector might forget part of its case, might have weaknesses in it that one could show the judge and get him or her to understand. But more likely that the debt collector will be able to gloss over the weaknesses of the case, and the person sued will not have time to understand what’s happening or how to show what needs to be shown.

You can’t wait so long.

You Need to Understand, Not Get a List of Questions to Ask

One of the reasons you need to give yourself time for your case is that lawsuits and courts are different – they have different rules, different cases and precedents, and even different laws. You need to figure these out and learn how to apply them to your own case. Then, you must prepare for the things the debt collector is going to say to try to convince the judge to do something you don’t think he or she should. From the outside, court seems to go slowly. If you’re in it, it goes really fast, and it’s hard to know what to say. It’s hard to keep your head when things come up suddenly under pressure. The only way you can count on getting things right is to work on them before you’re in court.

If You’re Going to Ask for Help…

If you’re going to ask for help, you should carefully consider the situation of the person you’re asking.  You should be polite, and that would include addressing the person by name, using the word “please,” and other basic considerations. Sending a lengthy series of questions with a subject line “Need Answers…” is not considerate; doing it on Friday night with a deadline a few days later imposes too much.

Beyond that, though, is the whole question of what the person is doing. When I get a question, I’m usually willing to offer some help. If you have a lengthy series of questions that will take a considerable amount of time to address? That’s what our membership is for.