Priority Claims in Bankruptcy
When a person or business begins the process of a reorganization bankruptcy, the debts affected are prioritized by the bankruptcy court. The reasons for this are simply that certain obligations are deemed more important to fulfill than others. If you have questions about your bankruptcy and indebtedness, a College Station bankruptcy attorney can help.
First Priority Debt Claims
Title 11, Section 507 of the United States Code establishes the criteria for prioritizing debts in a bankruptcy. This is to ensure that the most crucially needed obligations will be paid first. As such, the highest priority is given to domestic spousal and child support. If a family court or other government agency determined support that you are owed after the initial divorce decree, this is of first priority as well.
Other Priority Claims
The second priority for a debt claim falls to court and other administrative expenses resulting from the bankruptcy. Included as second priority are debts for maintaining property that is in the debtor's estate as well, such as property maintenance.
Should you be a business that is reorganizing debt, the third priority is for unsecured business debts following the opening of an involuntary bankruptcy. This, however, is applicable prior to the appointing of a trustee and issuing of an order for relief.
Fourth priority is given to wages and other remuneration for employees who should have been paid during the 180 day period prior to the petition for bankruptcy. There is a limit on the amount per employee. Following this are the fifth priority items, which are contributions owed to employee health insurance, life insurance and other benefit plans.
The final five priorities are as follows:
- Sixth Priority claims involve the farming and fishing industries. If your bankruptcy is for a business of this sort, consult a College Station bankruptcy attorney for details.
- Seventh Priority is set aside for protection of claimants who were in the process of purchasing property from the debtor and had paid deposits toward this end.
- Eighth and Ninth Priority are government claims. This includes taxes, FDIC debts, etc.
- The Final Priority is a personal injury or wrongful death claim judgment for a DUI.
Other debts that do not fall within any of the aforementioned categories are considered non-priority, and are handled last. It should be kept in mind that if you are filing for a reorganization bankruptcy you will work with a trustee until your debts are paid or dismissed.
Contact a College Station bankruptcy attorney for Further Assistance
If you need assistance with filing for bankruptcy protection, a College Station bankruptcy attorney at Peterson Law Group will be happy to work with you. We will provide you with quality legal assistance and help you through this difficult matter. Call to arrange a consultation today at 979-703-7014.
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