How are creditors paid?
The money which you pay to the Trustee is used to pay expenses of administration, including payments to your attorney, and payments to your creditors. So that you will have some idea as to how the creditors are paid, you should understand that there are three (3) basic types of claims: priority (which are tax claims), secured (holding lien on property), and unsecured (consumer debt with no liens on property). Generally, we pay the administrative costs (your attorney’s fees) first, then secured creditors, then priority, and finally, unsecured.
The money which you pay to the Trustee is used to pay expenses of administration, including payments to your attorney, and payments to your creditors. So that you will have some idea as to how the creditors are paid, you should understand that there are three (3) basic types of claims: priority (such as tax claims), secured (holding liens on property) and unsecured (consumer debt with no liens on property). Generally, your Trustee will pay secured creditors first, then administrative costs, then priority and finally unsecured.
