Chapter 7 Bankruptcy | Paying Priority Debts
Chapter 7 Bankruptcy . Priority debts are paid first if a Chapter 7 trustee disburses property in the course of the Chapter 7 case. This can be very helpful when the priority debt can’t be discharged in your bankruptcy (which is usually the case). For example, liability for a recent income tax is both a priority debt and a debt that can’t be discharged in bankruptcy. Having your property pay off the tax debt—which you will have to pay anyway—is a lot better than having your property go to pay off debts that would otherwise be discharged in your bankruptcy.
Common Priority Debts in Chapter 7 Bankruptcy
Priority debts that may come up in consumer bankruptcies include:
wages, salaries, and commissions owed by an employer up to $12,475 per person earned within 180 days of your bankruptcy filing
contributions to your employees’ benefit plans rendered within 180 days of your bankruptcy filing
debts of up to $6,150 (each) owed to certain farmers and fishermen
up to $2,775 in deposits made for the purchase, lease, or rental of property or services for personal, family, or household use that were not delivered or provided
alimony, maintenance, or support
income taxes that became due within the three-year period before the bankruptcy filing date and taxes that were collected or withheld from an employee (trust fund taxes); also, customs, duties, and penalties owing to federal, state, and local governmental units, and
claims for death or personal injury (not property damage) that came about because of your driving under the influence of alcohol or drugs.
To learn how other debts are managed during Chapter 7 Bankruptcy, contact a qualified bankruptcy attorney.
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If you feel that Chapter 7 Bankruptcy is right for you, contact the experienced team at Pinkston & Pinkston, Jacksonville’s Best in Bankruptcy Law.