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Priority Claims in Bankruptcy
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Flashcards
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Nonpriority Unsecured Claims
These claims include general unsecured debts without a specific priority status, such as credit card debt, and are paid after all priority claims.
Student Loan Claims
While difficult to discharge, student loans are unsecured and have no special priority, thus they are paid after all priority claims but before equity holders.
Employee Benefit Plan Claims
Claims arising from contributions to employee benefit plans fall after wage claims in the priority order and are subject to similar limits.
Fines and Penalties Owed to Governments
Claims for non-compensatory fines and penalties owing to governmental units may be given a lower priority in payment.
Wage Claims
Wage claims come from employees' earned but unpaid wages, with a specified limit, and are to be paid after secured and administrative expenses.
Consumer Deposits
Claims for consumer deposits, like layaway or rental deposits, are given a priority and paid after alimony and child support claims, up to a certain amount.
Subordinated Debt
Subordinated debts are lower in priority than general unsecured claims and are often paid only if all other claims have been satisfied.
Equity Interests
Equity interest holders, including shareholders or partners, are last in priority and typically receive payment only if all creditors have been satisfied.
Secured Claims
Secured claims have the highest priority as they are backed by specific collateral. They are paid from the proceeds of the collateral's sale.
Injury Claims Due to Drunk Driving
Claims arising from personal injury due to intoxication of the debtor are prioritized and generally paid after other priority unsecured claims.
Postpetition Claims
Claims arising after the bankruptcy filing date, these may be treated differently depending on the circumstances and type of bankruptcy filing.
Administrative Expense Claims
Administrative expenses are second in line for payment. They include costs of preserving the estate and expenses for managing the bankruptcy process.
Priority Unsecured Claims
These claims are third in priority and include unsecured debts viewed as important to the system, such as certain taxes and employee wages.
Alimony and Child Support Claims
These personal claims are given high priority and are paid following the payout of administrative and wage claims.
Unsecured Tax Claims
Certain tax obligations are classified separately and given a priority status, paid after priority unsecured claims.
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