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Much depends on whether a creditor is fully secured or undersecured. The claim of a fully secured creditor must be paid in full in cash, and if deferred cash payments are made on the claim, interest must be paid to the creditor for not receiving its cash immediately.
A secured claim is a financial obligation for which there is collateral to guarantee the payment of a debt. The collateral can be most any type of property, such as real estate, business inventory and personal goods. With most secured claims, the debtor voluntarily pledges an interest in property to the creditor.
When "cash collateral" is used (spent), the secured creditors are entitled to receive additional protection under section 363 of the Bankruptcy Code. The debtor in possession must file a motion requesting an order from the court authorizing the use of the cash collateral.
What Is a Secured Claim? mortgages. car loans. unpaid real estate taxes, and. other property liens.
Secured Claim Under 11 U.S.C. §506(a) The claim is secured so long as the creditor has the right to be paid from the property prior to other creditors. The amount of the secured claim cannot exceed the value of the property. Any amount owed to the creditor in excess of the value of the property is an unsecured claim.