In What Order are the Creditors Paid in a Bankruptcy Case?
While bankruptcy is a great way to get your debts discharged and get out of a bad financial situation, it simultaneously allows many creditors to get paid too. Creditors are allowed to collect some portion of the debt that is owed to them in both Chapter 7 (liquidation bankruptcy) and Chapter 13 (repayment plan) bankruptcies. The court appoints a bankruptcy trustee and they both are responsible to ensure that fair distribution of payment takes place. The payment process depends on the nature of the debt as well as the Chapter bankruptcy is filed under. What is The Order [...]