How do I know which debts must be paid off first in bankruptcy?

There are certain debts called priority claims that need to be paid in bankruptcy. Paying them off is subjective as these types of payments are ongoing and only end for particular reasons.

Definition of a Priority Claim

A priority claim is for someone who has a financial claim with the debtor that cannot be eliminated through bankruptcy. These types of claims are always unsecured. Some of them are child support, alimony, certain taxes, and damages being paid as a result of a DUI. There is no property securing these but they are to be paid nonetheless. The courts will not allow a debtor to escape from the burden of payment meaning that these are going to be paid first.

Secured claims come next, then unsecured. Any monies left over after taking care of the priority claims will be distributed to successive creditors. So a secured creditor will be paid first in order of importance, then unsecured will get what's left, if there is anything. Having money in a bankruptcy estate does not mean that all creditors will get paid, only those who have priority claims.

Hire Legal Help

If you're looking to eliminate debt through bankruptcy but have an ex-spouse or children in the picture, talk to a lawyer. These types of claims cannot be ignored and a lawyer will keep you from getting into trouble in family court for non-payment.