Lean Times for CU Liens

Across the country, trustees are getting more aggressive in their attacks on motor vehicle security interests. The consequences of a lien avoidance action can be dire. This befalls the credit union notwithstanding its best efforts to observe lending policies and procedures, and fundamental due diligence. When you and your member enter into a security agreement, your security interest "attaches." Your security interest now is enforceable. But to trump third parties who might obtain an interest in the vehicle (purchasers, other lenders, bankruptcy trustees), you must "perfect" your interest -- usually by recording your lien on the title. Under the Bankruptcy Code, you must perfect within 30 days of the date the member takes possession.