Home » Articles » Finance / Wealth

What Are Priority Debts During Bankruptcy?

What Are Priority Debts During Bankruptcy?
"""When you register for bankruptcy, a trustee will be appointed. As part of his responsibilities, he will assist you in preparing for the court hearing at which the judge will determine your eligibility for bankruptcy protection. You will be asked to enumerate all of your debts as part of this preparation. You and the trustee will divide the debts into three categories: secured, unsecured, and priority. All these debts will be of relevance to the court. Priority debts are the ones that will be of particular interest to you.

A priority debt is one that the judge deems significant enough to be given precedence over others. Why are you concerned with this? If the judge approves your bankruptcy petition, a portion of your obligations will be discharged. This is the primary reason why the majority of individuals petition for bankruptcy.

However, other debts will not be discharged. This implies that even after filing for bankruptcy, you will be required to repay these debts. In most instances, the debts that cannot be discharged fall under the category of priority debts. Since these debts cannot be discharged, you must ensure that any assets that are liquidated to settle your debts are applied first to your priority debts.

So what types of debts fell into the category of priority? Probably the most prevalent type is a tax debt. If you are behind on your income taxes, it is extremely unlikely that they will be forgiven. Child support is another important debt. The courts do not want you to be able to avoid your parental responsibilities by declaring bankruptcy. Similarly, alimony and spousal support debts are typically ineligible for discharge.

If you operate a business with a policy of contributing to employee benefit plans, these plans are typically classified as a priority debt.

As you and your bankruptcy attorney examine your financial documents, it will become evident which debts you will still be responsible for if your bankruptcy petition is granted.

State-by-state norms for determining which debts fall into the priority category vary. Before you file for bankruptcy, you should consult with a bankruptcy counsel who has experience in your state to determine which debts are likely to fall into this category. He will help you determine whether filing for bankruptcy is your best financial option.""

" - https://www.affordablecebu.com/

Please support us in writing articles like this by sharing this post

Share this post to your Facebook, Twitter, Blog, or any social media site. In this way, we will be motivated to write articles you like.

--- NOTICE ---
If you want to use this article or any of the content of this website, please credit our website (www.affordablecebu.com) and mention the source link (URL) of the content, images, videos or other media of our website.

"What Are Priority Debts During Bankruptcy?" was written by Mary under the Finance / Wealth category. It has been read 87 times and generated 0 comments. The article was created on and updated on 03 June 2023.
Total comments : 0