Priority (Bankruptcy) Law and Legal Definition
Priority is subject to different meanings, but in the context of bankruptcy law, it refers to the right to be first or ahead of the rights or claims of others. Priority in bankruptcy law is the right to collect before other creditors, so that the debt must be paid when the debtor becomes insolvent before other debts. Priority may be given to taxing authorities, judgment holders, secured creditors, bankruptcy trustees and attorneys. The right also can apply to mortgages, deeds of trusts or liens given priority in the order they were recorded.
Subject to certain exceptions, if a debtor is located in a jurisdiction, the law of that jurisdiction governs the perfection of a security interest, the effect of perfection or non-perfection and priority issues.