Frequently Asked Questions
What is the significance of being a gap creditor?
Being a gap creditor means that your security interest in the collateral is not as strong as the primary creditor's interest. In the event of default or bankruptcy, the primary creditor will have priority in recovering their debt from the collateral before you can claim any remaining value.
Can a gap creditor still recover their debt?
Yes, a gap creditor can still recover their debt, but their recovery is subject to the rights of the primary creditor. If there is any remaining value in the collateral after the primary creditor has been satisfied, the gap creditor may be able to claim that value to satisfy their debt. However, it is important to note that the amount recovered by a gap creditor is typically less than the amount owed.
The 2023 Legal Trends Report
Dive into this data-driven analysis and gain valuable insights on legal cloud technologies, evolving client expectations, state-by-state billing rate breakdowns, and more.
Check out Clio's latest blog articles.
Get the latest articles on how to run a more efficient, profitable law firm.
Loading ...
