When a person or business borrows money, or purchases or leases goods on credit (without paying the full purchase price up-front), the credit extended to the borrower (1) may be secured/collateralized by money or other assets, or (2) may be unsecured. For example, if your business takes out a loan from the bank, the bank will likely require you to pledge certain assets as security or collateral for the loan—and if you default on the loan, the bank may use the legal process (attachment, repossession) to gain ownership of those pledged assets to satisfy the debt.

Other transactions in which a creditor extends credit to your business may be unsecured—such as the bank that issues your business credit card without requiring you to pledge specific assets as collateral in case you fail to make the payments. But even an unsecured creditor can file a lawsuit against you or use other means to collect the debt you agreed to repay. The law of secured transactions is generally governed by the uniform commercial code (UCC), which has been adopted and made the law in some form in most states.

In Maine, as in most states, the law of secured transactions is governed by the Uniform Commercial Code (UCC), specifically Article 9, which has been adopted into state law. When a business or individual borrows money or obtains goods on credit, the creditor may require collateral to secure the debt. This means that the borrower pledges assets such as property, equipment, or inventory to guarantee repayment. If the borrower defaults, the creditor has the right to repossess or foreclose on the secured assets through legal processes like attachment or repossession. On the other hand, unsecured credit does not involve specific collateral. Credit cards are a common example of unsecured credit. While unsecured creditors do not have an immediate right to specific assets of the borrower, they can still pursue legal action to collect the debt, such as filing a lawsuit or obtaining a judgment to garnish wages or bank accounts. It's important for businesses in Maine to understand the implications of both secured and unsecured credit, as the rights and remedies available to creditors and the obligations of debtors differ significantly between the two.