Which of the following is true in regards to a dispute when two parties have given a loan over collateral?
A) The party with the secured interest will have priority in repossessing the collateral over the party with the unsecured interest.
B) Both parties will be able to claim an interest in the collateral and a court will allocate the percentage owed to both.
C) The first to file a lawsuit is the one who receives the collateral.
D) The first to physically reposse the collateral will be the winning party.
E) The banks will assess allocation between themselves based on who was the first to secure the loan on the collateral.

Question

Quizplus · Accepted Answer

The party with a secured interest in the collateral typically has priority over parties with unsecured interests in the event of a default. This is because secured creditors have a legal claim to the specific collateral that secures the loan, whereas unsecured creditors do not.

Which of the Following Is True in Regards to a Dispute