What Are the Rules on Paying Creditors during Bankruptcy?
Some debtors approaching bankruptcy may have certain creditors that they would prefer to pay off first from their liquidation proceeds or through their repayment plan. However, the law has established which creditors have priority when filing for bankruptcy. These creditors will generally receive payment before other creditors are paid.
If you’re considering filing for bankruptcy, our experienced advisors may be able to help you make more informed decisions throughout the process. For more information, contact the Birmingham bankruptcy attorneys of GREENWAY BANKRUPTCY LAW, LLC, today at (205) 324-4000.
Cases of bankruptcy follow legal precedents to figure out who is paid first through the debtor’s repayment plan or liquidation. Although these creditors will rarely receive the full amount of their debts, they will receive the benefit of getting available funds before other creditors can.
In cases of unsecured debt, which is debt that isn’t tied to collateral property, the following types of creditors are given priority over others:
- Tax agencies
- Creditors owed child support
- Creditors owed wages as an employee or contractor
These individuals and groups have the option to collect their funds before other unsecured debtors. This means that a debtor cannot usually choose who they want to prioritize in debt repayment.
If your finances have become impossible to manage, bankruptcy may be the best option available. To discuss how this legal action may work for you, contact the Birmingham bankruptcy lawyers of GREENWAY BANKRUPTCY LAW, LLC, by calling (205) 324-4000 today.