Oversecured Claims

Oversecured claims refer to debts where the creditor has a legal right to collect from assets worth more than the amount owed. In simpler terms, if a borrower defaults, the creditor can repossess property that secures the loan, which is valued higher than the debt. This gives the creditor a stronger position, as they are more likely to recover the full amount owed through the sale of the secured asset. In bankruptcy or insolvency, oversecured creditors may have priority in repayment due to the value of their collateral.