• PMSI gives the retailer or supplier priority to collect debt in the event of default by the borrower or buyer.
  • The item sold in such cases is a bond that can be seized for non-payment.
  • For inventory items, the creditor party must notify the other parties of potential secured interest claims and also file a UCC-1.
  • For non-inventory items, the lender must file a UCC-1 before the borrower takes possession of the item or within the first 20 days thereafter.
  • While lenders often have priority based on the timing of their secured interest, PMSI creates an exception that allows lenders to “jump out of line” even if they weren’t first.