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Priority Rights
Last Updated: Jun 7, 2019
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Priority Rights are used to determine which creditor has the senior claim to receive payment from a borrower or from the liquidation of certain of borrower’s property. Priority is generally determined by time of filing and perfection of a security interest in the property in question. For example, a first lienholder who perfects its interest in collateral will have priority rights over a second lienholder. If the borrower goes into bankruptcy, the first lienholder will be entitled to receive its payment in full before the second lienholder is entitled to receive anything.