HOW DOES THE BANKRUPTCY CODE CLASSIFY CREDITORS FOR DISTRIBUTION?
There are certain creditors who are given priority in payment (paid ahead of others) from proceeds collected and assets liquidated by the trustee. The BAPCPA OF 2005, re-wrote the rules big time here. They are, in order of priority: Trustees fees and expenses 1) Allowed unsecured claims for domestic support obligations to individuals. Allowed unsecured claims for domestic support assigned to a governmental agency. 2) Administrative expenses of the estate. 3) Allowed unsecured claims incurred while an involuntary petition was pending prior to an order for relief. 4) Claims for wages, salaries, or commissions , including vacation, severance, and sick leave, owed to an employee by the debtor at the time of filing which were earned with in 180 days for filing up to $10,000. Claims for sales commissions with the same dollar and time limits if the recipient is an individual or sole stockholder in a sales company if that entity earns 75%or more of its gross from the debtor. 5) Contributions t
