Rule of Marshaling Remedies Law and Legal Definition

Rule of marshaling remedies is an equitable doctrine that requires a senior creditor, having two or more funds to satisfy its debt, to first dispose of the fund not available to a junior creditor. The holder of the security on two funds, it is said, is compelled to shape his own remedy so as to preserve, if possible, the equity of the one whose lien extends to but one fund. The rule prevents the inequity that would result if the senior creditor chooses to satisfy its debt out of the only fund available to the junior creditor thereby excluding the junior creditor from any satisfaction.

This is also known as marshaling doctrine; rule of marshaling securities; rule of marshaling assets.