What Is A Priority Debt?
A priority debt is a debt which can effect your standard of living. Such as your: Mortgage Utility Bills Car Finance Court Fines Secured loans, Rent etc. Usually these are not the type of debts we can repay on the plan. However, when we prepare a financial statement for you, we will ensure that you have sufficient funds available to repay them directly.
Some debts are more important than others. The law gives different creditors (the people you owe money to), different ways of getting their money back. With priority debts, some creditors could take your home away (repossession or eviction) or send out bailiffs to take items from your home to sell (called distraint). It is therefore important to sort out your priority debts first.
A priority debt is a debt entitled to priority in payment in a bankruptcy case. A general listing of priority debts is given in 11 U.S.C. 507 of the Bankruptcy Code. Examples of priority debts are some taxes, wage claims of employees, debts related to goods and services provided to a debtor’s estate during the pendency of a bankruptcy case. In addition, alimony, maintenance or support of a spouse, former spouse, or child is considered a priority debt. If you have questions deciding which of your debts are entitled to priority status, you should consult an attorney. 25.
