What Is an Unsecured Priority Debt In a Bankruptcy Case?

bankruptcy

What Is an Unsecured Priority Debt In a Bankruptcy Case?

When bankruptcy debtors submit their schedules of assets and debts in bankruptcy cases, they must list their debts based on whether the debt is unsecured, secured, or a priority debt. The Bankruptcy Code (Title 11) defines those debts that are “priority” debts under the federal bankruptcy law. An unsecured priority debt is an obligation that is not collateralized by a lien on any of the debtor’s assets but is nonetheless given priority over general unsecured nonpriority debts.

Federal bankruptcy identifies certain debts as “priority claims” that must be paid prior to general unsecured debts. Secured creditors are typically paid first in a bankruptcy case while unsecured creditors are paid last. Priority debts are unsecured obligations that Congress prioritizes for payment. Although unsecured and considered a priority unsecured debt, they are unlike a credit card debt that is a nonpriority unsecured debt. Priority debts include:

  • some taxes and debts owed to governmental units;
  • domestic support obligations such as alimony and child support;
  • wages, salaries, and commissions owed by an employer to a current or former employee;
  • employer contributions to employee benefit plans; and
  • claims and fines for death or personal injury resulting from driving under the influence of drugs or alcohol.

Priority unsecured debts such as domestic support obligations and taxes receive special treatment in bankruptcy cases and are paid before nonpriority unsecured debts. These rules ensure that individuals attempting to avoid their responsibilities to pay taxes, child support, and alimony cannot unfairly use bankruptcy to achieve their goals. Priority debts are listed on a debtor’s Schedule “E” which is filed with the U.S. Bankruptcy Court.

Lehman Franklin has helped those seriously affected by financial hardship in the Statesboro community for over 50 years. Along with a capable and dedicated support staff, attorneys H. Lehman Franklin and Kimberly Ward offer quality and zealous representation on behalf of all of their bankruptcy clients. Don’t hire just any bankruptcy lawyer to file your case. You need a lawyer like Lehman Franklin or Kim Ward who have 65 years of collective experience filing bankruptcy cases. If you’re in need of our services and would like a FREE consultation, give us a call, send us an email or simply check us out online.

Lehman Franklin, P.C. is located at 127 North Main Street in Statesboro, GA (30458). We proudly serve Bulloch County, as well as the surrounding counties of Chatham, Candler, Evans, Bryan, Effingham, Screven, and Jenkins. Contact our office by telephone at 912-764-9616, by email at info@hlfranklin.com, or browse our website at hlfranklin.com. We’re available to meet your legal needs Monday through Friday from 8:30 AM until 5:30 PM.