Bankruptcy

Priority of Claims in Bankruptcy

Priority of Claims in Bankruptcy

November 30
00:00 -0001

Priority of Claims in Bankruptcy

Debtor-creditor law does not only concern itself with
bankruptcy proceedings, but of course, this does not mean that it excludes them
from consideration either. As veterans of bankruptcy law understand, not every
legitimate bankruptcy claim made by creditors may be evaded on the
part of the debt
or. Some debts are, by law, nondischargeable
debts, and thus, must be included with all payments to be made in a
rehabilitation/reorganization plan.

In attaching a priority to bankruptcy claims, it
would make sense that these types of debts would be highest up on the list.
Indeed, first on this list is the need of the debtor to cover all monthly
domestic support charges. Following th
at are administrative expenses incurred in legal appeals for bankruptcy
and claims related to
the debtor’s normal business operations.

As with the policy on dischargeability of debts,
bankruptcy claim priority is spelled out in Subchapter 5 of the
 Bankruptcy Code. The next category of bankruptcy
claims that one would be able to assign in the Section 507 priority
compendium revolves around a realization of the person’s livelihood. One
such bankruptcy claim is that of wages and sales commissions for regular
income earners, but only to a maximum of $10,000. Another governs planned
contributions to an “employee benefit plan.”
 

As for the remaining claims on the priority list, they
are harder to categorize, but they still have their place in the grand scheme
of things. The seventh claim named in Section 507 is monies intended for use in
securing a piece of real estate. Bankruptcy claims of the eighth and ninth
order invoke the
Federal Government
as creditor, in particular, certain kinds of taxes and commitments to “a
Federal depository institution
s regulatory agency (or predecessor to such
agency) to maintain the capital of an insured depository institution.” The
final bankruptcy claim echelon is restitution for damages incurred in operating
a land or sea vehicle while intoxicated. 

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