Secured parties have priority over unsecured parties to the proceeds from the disposition of collateral on the distribution of a debtor's estate.

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This is a fundamental principle of secured transactions. When a debtor defaults on a secured debt, the creditor (secured party) can take possession of the collateral and sell it to recover the debt. The proceeds from the sale go to satisfy the secured debt, and any remaining funds are distributed to other creditors. The secured party has priority over unsecured creditors to these proceeds.

Secured Parties Have Priority Over Unsecured Parties to the Proceeds