Secured Transactions:

The State of Kentucky generally adopts the provisions of the Uniform Commercial Code in secured transactions.

A creditor generally is entitled to recover possession of collateral upon the default of a debtor on a secured transaction. In obtaining possession of collateral, a creditor may do so without judicial process if it can be done without breach of the peace or by judicial action. (KRS 355.9-503.)

After a debtor's default, a secured creditor may sell, lease or otherwise dispose of the collateral in a commercially reasonable manner. (KRS 355.9-504.) Any time before the disposition of the collateral, a debtor may have a right to redeem the collateral by tendering full payment of the obligation owed and all reasonable expenses incurred by the creditor. (KRS 355.9-506.)

The disposition of the collateral may be conducted by public or private sale. Reasonable notice of the time and place of the sale is generally required to be given to other secured creditors and the debtor. (KRS 355.9-504(3).) A creditor must account to the debtor any surplus, and unless otherwise agreed, the debtor may be liable for any deficiency. (KRS 355.9-502(2).)

The UCC (also called "the Code") is comprised of several Articles, each of which governs a specific area of business. Kentucky's UCC is codified in Kentucky Revised Statutes, Chapter 355.

In Kentucky, most UCC filings are made locally in the county clerks' offices. KRS 355.9-401 outlines in detail the appropriate place of filing. In cases where the debtor resides out of state, the UCC filings are made in the Secretary of State's office. If a debtor has changed residence after the filing of an original financing statement, a lawyer should be consulted about the proper place for subsequent filings.

Beginning Jan. 4, 1999, the secured party must file a file-stamped copy of this filing, financing statements amendment, assignment, continuation, release and termination with the Secretary of State for inclusion in the Kentucky Lien Information System. (1998 Ky. Acts Ch. 542).

Kentucky Secretary of State John Y. Brown III has done a great job of supplying Kentucky UCC information on his internet site. An overview is available here, and UCC Search is available here.

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