What happens to a security interest if a debtor changes their name?

When a debtor changes their name, the security interest may become unperfected unless the financing statement is amended. This occurs because the name change can affect the ability of third parties to be aware of the existing security interest. Under the Uniform Commercial Code (UCC), a financing statement must accurately reflect the debtor's name to ensure that it remains effective and is properly indexed in public records. If the name change is not updated in the financing statement, it could lead to a situation where a subsequent creditor or other interested parties cannot locate the financing statement, thereby jeopardizing the priority of the security interest.

Maintaining an accurate and current filing is critical for perfection since the law requires a proper notice system to inform third parties of existing security interests in the collateral. If the financing statement is not amended to reflect the new name, the security interest risks losing its perfected status, which could lead to significant implications for the secured party's rights in the event of default or bankruptcy.