Asked by chikatimalla bhargavi on May 27, 2024
Verified
In general,secured parties have priority over unsecured creditors.
Secured Parties
Creditors who have the right to seize collateral if a debtor fails to fulfill their obligation under a secured agreement.
Unsecured Creditors
Creditors who have extended credit without the protection of collateral, making their claims on a debtor’s assets secondary to those of secured creditors.
- Differentiate between perfected and unperfected security interests and their consequences for creditor precedence.
Verified Answer
PC
Precious ColemanJun 03, 2024
Final Answer :
True
Explanation :
Generally,secured parties have priority over unsecured creditors.Thus,if two parties provide a loan based on the same collateral,the party with the secured interest will have priority in repossession of the collateral over the party with the unsecured interest.
Learning Objectives
- Differentiate between perfected and unperfected security interests and their consequences for creditor precedence.