There are various forms of creditors in a bankruptcy procedure. In priority, they are secured creditors, preferred creditors, and unsecured creditors.

Question

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This statement is true. Secured creditors have priority as they have collateral to collect from if the debtor defaults, followed by preferred creditors who have specific legal protections, and then unsecured creditors who have the lowest priority.

There Are Various Forms of Creditors in a Bankruptcy Procedure