What is priority?

The word priority refers to the right of a secured creditor to derive the economic benefit of a security interest in preference to the right of a competing claimant. Issues of priority arise in situations in which the debtor has granted security interests to multiple secured creditors in the same collateral or the debtor has other claims against the general assets such as when someone has a judgment against or the debtor owes money to the employees. The Act provides for specific rules that determine priority conflicts between different kinds of secured creditors, creditors, or buyers of the collateral.