The Secured Transactions Article of the Commercial Code and Section 60 of the Bankruptcy Act

Abstract

The secured creditor enjoys several advantages over his unsecured brethren. If the debtor defaults on his obligation, the secured creditor is sometimes empowered to take matters in his own hands, sell the property covered by his security, and reimburse himself out of the proceeds without the time and expense of the lawsuit to which the unsecured creditor must resort. If the debtor disposes of all of his property, the secured creditor's claim, if properly perfected, follows the property into the hands of the transferee and may be satisfied therefrom without the necessity of litigation to establish that the transfer was a fraudulent conveyance. If unsecured creditors go after property of the debtor to satisfy their claims, the secured creditor's interest in the property covered by his security, if properly perfected, is immune from their levies. And if the debtor goes into bankruptcy, the secured creditor has first claim on the proceeds of the property covered by his security, after which he shares pro rata on any unpaid balance with the full claims of unsecured creditors in the remainder of the debtor's assets.