Creditors' Rights 18
Q: What can a creditor do
once a customer is on its “credit radar screen”?
A:
If a customer starts
becoming a problem from a
credit standpoint, there are certain
actions that a creditor can
take. First, on any new orders
the creditor may look to shift to prepayment for goods.
Creditors may seek to obtain a security interest on the customer’s
assets to secure payment of old debt. Creditors may
also seek to obtain a purchase money security interest in their
goods supplied to the customer to secure new debt as a condition
of providing merchandise going forward.
Creditors should be aware of rights that exist under the
Uniform Commercial Code, such as reclamation and the
right to stop goods in transit, in the event that the creditor
believes that the customer may be insolvent.
