Security interest (pant)
Also known as pledge, charge, mortgage, pantsætning, panteret, pantsætter
A security interest is a right in a specific asset — it gives priority of recovery in that asset ahead of the other creditors.
In practice
Security is the difference between standing in the queue and standing outside it. If the debtor goes bankrupt, the secured creditor takes its recovery from the charged asset before the unsecured creditors get anything at all.
It is the most important decision in the whole credit relationship — and it is not taken in the collections department. It is taken on the day you say yes to the order. Afterwards it is too late.
Where it commonly goes wrong
- Security is considered once the customer stops paying. By then it can no longer be obtained.
- What has already been charged is overlooked. If the asset is mortgaged beyond its value, a security interest ranking last is worth nothing.