In bankruptcy do some creditors get more money than others?

Yes, there are creditors priority in bankruptcy, specifically those who are part of a chapter 7. Who and what get more money than others depends a few different criteria. The chain of distribution starts at the top with the trustee, accountant or lawyer, and the IRS being paid first. The rest is determined by how much money is left in the estate, is the claim a priority or non priority, and secured or unsecured status of the creditor.

Administrators Get Paid First

Those who have worked on the bankruptcy estate are the first to be paid. As they do all of the work to determine what is available from the petitioner, they are the first ones to receive any money. Any exempt back taxes owed to the IRS will be settled as much in full as possible. In a sense they are the ultimate priority claim on any available funds.

Priority and Non-Priority Claims

Certain schedules in the petition have to do with types of claims. Priority and non-priority as well as secured and unsecured. Any entity that has a secured priority claim is going to be the first creditor that receives funds. Unsecured non-priority claims are at the bottom of the list and the least likely to see any money if the estate is a poor one.

Legal Assistance

Consulting a lawyer will be the best way to get any questions about financial distributions answered. An experienced bankruptcy lawyer can look over all of the financial information and explain how creditors may get paid.