Priority Claims Explained

Priority claims are a way for the court to organize your unsecured debt and decide which debt takes ‘priority’ over the rest. These debts are usually not dischargeable in a Chapter 7 bankruptcy and usually cannot be reduced either. There is a set priority list that determines which debts fall into this category. Priority claims that involve individual debtors (i.e. bankruptcy resulting from individual debt rather than business debt) include:

• Child Support and spousal support
• Fees and administrative costs for filing bankruptcy
• Recent income taxes

When paying off your debts, this is the order in which the money in your bankruptcy estate will be spent. A claim that is higher on the list will need to be completely paid off before lower claims are paid. Additionally, if you have more than one debt in a single category, the recipients within that category will split the funds based on the size of their individual claim, until the debt owed to them is paid off.

If you are considering bankruptcy, contact the offices of Allmand and Lee at (214) 265-0123 to discuss your options. They have helped other good people through bad times and they can do the same for you, too.