Creditors’ Rights 18
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.
