Perfection (Bankruptcy) Law and Legal Definition
Perfection refers to validation of a security interest as against other creditors. This is usually done by filing a statement with some public office or by taking possession of the collateral.
Perfection in the context of bankruptcy means the procedure of making a creditor’s lien senior to other lien. Here a secured creditor takes certain steps to perfect his/her lien. On perfecting the lien the secured creditor’s lien becomes senior to other liens that arise after perfection. For example recording a mortgage with the county recorder makes such mortgage perfect and such mortgage will be senior to any other mortgage that arises subsequent to the perfected mortgage.