The unprecedented technology offered by Lease Security Systems now allows your collection team to disable your collateral with the click of a mouse. This level of power has caused many collection executives to exclaim “holy cow, is that even legal?!” I’m happy to tell you it is.
The perfection and enforcement of security interests in collateral is controlled by Articles 9 and 2A of the Uniform Commercial Code, respectively concerning financed and leased equipment. Article 2A mirrors Article 9’s provisions with respect to repossession. The UCC specifically authorizes the use of the Blok BoxTM by Lease Security Systems under sections 9-609 and 2A-525, which provide that after default, a creditor or lessor may “render equipment unusable” on the debtor’s premises without court order, provided that doing so can be done without a breach of the peace, which is generally defined as any entry into a facility without authorization from the debtor.
Until now, few creditors have been able to exercise their full range of rights under the UCC due to the technological limitations of doing so. The Blok BoxTM now provides the leverage contemplated by the UCC without the need for the lessor to take any additional steps. There is no need for a court order or a legal proceeding of any kind. The Blok BoxTM is an entirely novel way to use a law that has been in existence, but largely unused, for decades.
By enabling a lessor to instantaneously shut down one or more pieces of collateral, the Blok BoxTM is a powerful tool in compelling payment or recovering equipment after a default. Once the collateral is suddenly inoperative, the debtor immediately understands that this lender must be paid on time, month after month. However, the Blok BoxTM is not merely a sledgehammer that ensures collateral recovery, but is rather a collection tool of greater finesse. Unlike a conventional repossession, there is virtually no barrier to the exercise of this remedy – there are no court proceedings, no lawyers, expenses or delays associated with the Blok BoxTM. Upon a payment default, the debtor is immediately educated as to what will happen when they fail to pay on time – their equipment will no longer function. Most debtors will not even know they have Blok BoxTM secured equipment until there is an enforcement.
A Blok BoxTM enforcement is also unlike any other repossession type action because it can be easily undone with virtually no cost. Once paid, the equipment can simply be turned back on and business continues as usual. Where a repossession action can take months and tens of thousands of dollars, a Blok BoxTM enforcement can begin and end in a matter of hours.
Blok BoxTM provides a powerful reminder to a debtor of its obligations. It makes them far less likely to go repeatedly into default. The debts secured by the Blok BoxTM therefore tend to be the debts that are paid without delay on the day they are due. The monthly invoice for the loan protected by Blok BoxTM moves to the top of the pile every month.
Very importantly, Blok BoxTM can also locate collateral protected by the device. So in the rare instance where the borrower ceases all communication, even after a shut down, the lender can track the collateral, even if it has been moved or relocated from the place of its initial installation. If you have to repossess, we can tell you exactly where your collateral is. No other product can perform this function.
