How do secured transactions enhance the position of creditors against debtors?
The goal of the creditor will always be to get paid. Should a debtor refuse payment or be unable to pay, the creditor must be able to seize the debtor’s assets and satisfy the payment from the proceeds of their sale. Moreover, the creditor must be in a position to effectively and timely enforce its claim, all the while defeating other challengers in the game, such as the bankruptcy trustee, tax claims, labor claims, other secured and unsecured creditors, and the debtor himself. Loan transactions that are properly secured will raise the probabilities of getting there, and getting there early, to get fully paid, as a security device based on a wise strategy will prevent many of the challenges of litigation that could obstruct or unreasonably delay enforcement.