Short answer. The unpaid balance loses its special preference. Under Article 2251 of the Civil Code, the amount a preferred creditor could not recover from the specific property drops into the general pool of debts and is paid according to the order and rules that apply to all remaining unsatisfied claims.
What the law says
Those credits which do not enjoy any preference with respect to specific property, and those which enjoy preference, as to the amount not paid, shall be satisfied according to the following rules: (1) In the order established in article 2244; (2) Common credits referred to in article 2245 shall be paid pro rata regardless of dates.
Civil Code, Article 2251 — Payment of the Remaining Credits. Read the full provision →
When a preference runs out
A preference attached to a specific property — a mortgage on land, a lien on goods — only extends as far as that property's value. If the property is sold and the proceeds cover the debt in full, the creditor is satisfied. But if the property brings in less than what is owed, the creditor is still a creditor for the balance. That balance, however, is no longer backed by any special privilege. Article 2251 of the Civil Code addresses exactly this situation: the unpaid portion is now treated like any other general claim against the debtor's estate.
The two rules that govern what remains
Article 2251 directs remaining unsatisfied claims — whether they originally had a preference or never did — to be paid according to two rules. First, claims follow the order established in Article 2244, which is a ranked list of preferred debts with respect to the debtor's other property: funeral expenses, employee wages for the past year, last illness expenses, labor accident compensation, and so on down through taxes and claims backed by public instruments or final judgments. Second, truly common credits — those that fall under Article 2245 because they hold no recognized preference at all — are paid pro rata, meaning each gets a proportional share regardless of which debt came first in time.
What this means for the partially paid creditor
If you are a creditor who holds a preference on a specific asset that sold for less than your claim, you do not lose your ability to pursue the balance. You remain a creditor of the debtor's estate for whatever was not recovered. But you must now compete with all other general creditors for what is left. The priority you enjoyed over the specific property does not carry over: you are in line, not at the front of it, for the remaining assets. How much you actually recover depends on what the debtor has left and how many other creditors share in it.
Practical implications for insolvency situations
This rule matters most when a debtor is insolvent — when total debts exceed available assets. In that situation, the order in which creditors are paid is everything, because late-ranked creditors may receive nothing at all. A creditor who expected to be fully paid from a secured asset and instead finds themselves with an unsatisfied balance needs to move quickly to assert their remaining claim in whatever insolvency or estate proceeding is underway. Delays can affect both ranking and recovery. A lawyer familiar with creditor's rights can help you understand your position and the steps available to you.