Perfection provides priority over which group?

Perfection provides priority over which group?

• A. Third-party unsecured creditors.
• B. The debtor.
• C. Other secured creditors with filed perfected interests.
• D. The government.

Answer: (A)

Perfection creates a claim in the collateral that is enforceable against anyone who doesn’t already have a security interest. That means a creditor with a perfected security interest takes priority over unsecured creditors—third parties who have only an unsecured claim. The debtor’s own rights in the collateral aren’t what give this priority; rather, the perfected lien establishes a superior right to be paid from the collateral if the debtor defaults. Among those who also have perfected interests, priority is determined by who perfected first, so perfection’s main effect relative to unsecured claims is the topmost standing before them.

Perfection creates a claim in the collateral that is enforceable against anyone who doesn’t already have a security interest. That means a creditor with a perfected security interest takes priority over unsecured creditors—third parties who have only an unsecured claim. The debtor’s own rights in the collateral aren’t what give this priority; rather, the perfected lien establishes a superior right to be paid from the collateral if the debtor defaults. Among those who also have perfected interests, priority is determined by who perfected first, so perfection’s main effect relative to unsecured claims is the topmost standing before them.