Who has priority between secured creditors according to the general rule?

In secured transactions, the general rule for determining priority among secured creditors is that the first to file a UCC-1 financing statement establishes priority over other secured creditors. This means that if multiple creditors have an interest in the same collateral, the one who properly files the UCC-1 statement first will have priority in case of default or bankruptcy. The filing serves as public notice of the secured party's interest in the collateral and helps to establish their legal position as a secured creditor.

This rule is fundamental because it provides clarity in the often complex realm of secured transactions. By adhering to the "first to file" principle, creditors can assess their risk and make informed lending decisions, knowing that the first to file will be prioritized in a hierarchy of claims against collateral. In the absence of a filing, other forms of perfection, like possession, do not grant the same level of priority unless certain exceptions apply, such as in the case of goods or instruments.

Other options do not reflect the general rule of priority among secured creditors. For instance, perfection through possession may grant priority over unperfected interests but not necessarily over those who have filed a financing statement. Similarly, mere notice of claim or simply being the first to lend funds does not establish an enforceable