First To File Rule
Barron's Banking Dictionary:
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Priority of Lien
Order in which creditors are paid when the assets of a borrower are liquidated. Creditor priority is established under the first to file rule in the Uniform Commercial Code, and is summarized as follows: creditors holding a Security Interest in collateral are paid before unsecured creditors. As a general rule, holders of secured claims are paid in the order their claims were filed, starting with the earliest recorded lien.
For example, in a Voluntary Bankruptcy filed under Chapter 7 of the Bankruptcy Code, the debtor's assets are liquidated to meet unpaid obligations. In general, the bankruptcy estate is distributed as follows: (1) administrative costs, including court costs, trustee's fees, attorney's fees incurred by the debtor; (2) wage claims; (3) costs and expenses incurred by creditors; (4) federal, state and local tax claims; (5) debts having priority under federal law, i.e., claims of secured creditors, followed by claims of general creditors (unsecured creditors.) Creditors holding a perfected security interest are paid before other creditors. See alsoPreference; Set-Off Clause.
Investopedia Financial Dictionary:
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First To File Rule
A rule stating that whoever is the first to file suit is awarded their home courts. The first to file rule provides an advantage in that the litigator may be familiar with the judge/court, and will not have to incur any extra costs such as travel expenses, nor leave their home for the duration of the trial. The first to file rule is just a general rule. It is not law, and exceptions can be made.
Investopedia Says:
Often, a change of location can be made as per a request, however, you run the risk of offending the local court as well as impeding on another, perhaps more crowded court. This means that the trial may be put on hold and dealt with in the order it was received by the new court which could be a significant delay.
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Barron's Banking Dictionary
Dictionary of Banking Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.
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