In a Chapter 7 case your unsecured debts are either priority or general unsecured. Chapter 7 legally writes off all or most of the latter. Last time we said there are two kinds of unsecured debts, “priority” and “general unsecured”: “Priority” debts are those that the law treats as special for various reasons. Past-due child support and unpaid recent … Read More
Unsecured debts are not legally attached to anything you own. They have no security. Certain special unsecured debts are “priority” debts. Unsecured Debts Debts that are unsecured are those which are not legally tied to anything you own. The creditor has no “security” attached to the debt, no “security interest” in anything. It has no right to repossess or … Read More
Overall, Chapter 7 deals with simple debts as well or better than Chapter 13 does, which deals with more difficult debts better. Debts in Bankruptcy When deciding between Chapter 7 “straight bankruptcy” and Chapter 13 “adjustment of debts” you look at many factors. You have to meet certain qualifications (usually easy to meet) to file either one. The amount … Read More
The laws about the treatment of different types of creditors can often be used in your favor to pay who you want or need to pay.
You can put a “preferential payment” to work for you if you owe a “priority” debt–back child or spousal support, or recent income taxes.
If a creditor’s proof of claim is a “priority” or secured debt is too high, object to it to avoid paying too much in your Chapter 13 case.
If you object to a creditor’s proof of claim in your Chapter 13 case, and prevail in that dispute, you pay nothing on that debt.
In some jurisdictions you can pay nothing to your “general unsecured” creditors, if all your money goes to paying higher priority ones.
Priority proofs of claim need to be carefully monitored in a Chapter 13 case. Make sure one’s filed so it gets paid, and at the right amount.
If you injured someone by unlawfully driving while intoxicated, the resulting obligation can’t be discharged in bankruptcy.
If you owe an employee wages or benefits, it’s likely a priority debt. Same if you are owed wages or benefits. More likely to be paid.
Income tax debt may be discharged–legally written off–in a Chapter 7 case. It just needs to meet some conditions.
A bankruptcy trustee would pay your “priority” debts ahead of other debts in an “asset case.” But what happens in a “no asset case”?
Here’s what happens to “priority” debts in an “asset case.”
What makes “priority” debts so special?