All That You Need To Know About The Priorities Claims And Taxes Of Bankruptcy

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Once you file for bankruptcy, you are appointed with a trustee who helps you in paying off your debts. However, the debts that are paid off to your creditors are based on the priority.

So what exactly do you mean by Priority Claims or priority tax?

Well, when a trustee pays off the creditors, they need to follow an order based on the priority of the money due. This means, the debts which are of higher priority are paid first and then the ones with lower priority are paid post that. So, debts like unsecured claims are always paid off in full on priority after which claims of the lower priority are paid. Also, the claim paid off is usually calculated as a proportion to the amount owed from the amount available in the funds.

The Priority Order List is as follows as mentioned under $507 –

1. Domestic Support obligation must be always paid in full. This includes all payments to support your spouse and child as decided by the court.
2. All the administrative expenses incurred during bankruptcy.
3. Wage claims Upto an amount of $10,000 per claim of employees and independent salesperson.
4. Employee benefit contribution upto $10000 per employee.
5. For debtors who are operating storage and processing facilities, they must prioritize claims of fishermen and farmers.
6. Layaway claims – claims for those individuals who made a deposit for a particular item but have not yet received that item.
7. Taxes for recent income, sales and employment receipts.

If the debtor is an individual, then in such a case, some of the above claims can also be non dis-chargeable like – taxes and domestic support obligation when you file for bankruptcy under chapter 7.

If you are looking for expert guidance on how to manage your claim and debts, do not forget to get in touch with the professionals. Log on to – https://recoverylawgroup.com/bankruptcy/ or call on 888-297-6203 to book an appointment.