A secured creditor may also be an unsecured creditor if the value of a creditor's claim exceeds the value of a debtor's collateral for the debt owed to the creditor.

Question

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If the value of the creditor's claim exceeds the value of the debtor's collateral, the creditor's claim is not fully secured by the collateral and any excess may be treated as unsecured.

A Secured Creditor May Also Be an Unsecured Creditor If