Priority Debts in No-Asset Cases
Priority debts are largely unaffected by a Chapter 7 case--it does not discharge them, so you need to pay them after finishing your case.
One of the most important aspects of bankruptcy is that all debts are not equal. "Priority" debts are treated special in a number of ways.
Exceptions to the Discharge of Debts in Chapter 7
Often all your debts are discharged--legally written off--in Chapter 7. But some you might want to pay, or might not be able to discharge.
“General Unsecured Debts” in Chapter 13
You pay your general unsecured debts only as much as you can afford during a Chapter 13 plan, with the rest then legally written off forever.
Unsecured Debts in Bankruptcy
Your debts are either secured by something you own, or they are unsecured. Unsecured debts are either "priority" or "general unsecured."
Chapter 13 with a Judgment Lien, HOA Lien, or Child/Spousal Support
Chapter 13 can work much better than Chapter 7 if you have a judgment or HOA lien on your home, or get behind on child or spousal support.
Chapter 7 with a Judgment Lien, HOA Debt, or Support Obligations
Here are 3 more scenarios for when you are current on your mortgage, where Chapter 7 works well in dealing with other home-related debts.
Simple and Not-so-simple Debts in Chapter 7 and 13
Very broadly speaking Chapter 7 handles simple debts as well or better than Chapter 13 does, which handles more difficult debts better.
Using “Preference” Law to Pay a Necessary Debt
You can put a "preferential payment" to work for you if you owe a "priority" debt--back child or spousal support, or recent income taxes.
Priority Creditor Proofs of Claim in Chapter 13
Priority proofs of claim need to be carefully monitored in a Chapter 13 case. Make sure one's filed so it gets paid, and at the right amount.
Everything to Know about the Automatic Stay
During the last 13 blog posts we've covered the automatic stay--crucial protection that filing bankruptcy gives you. Here's a helpful summary.
The Domestic Relations Exceptions to the Automatic Stay
Even if you file bankruptcy, certain actions can still be taken against you in divorce court, or about family law matters.
Can “Priority” Debts Be Discharged in Chapter 7 Bankruptcy?
A bankruptcy trustee would pay your "priority" debts ahead of other debts in an "asset case." But what happens in a "no asset case"?
“Priority” Debts in Chapter 7 Bankruptcy
Here's what happens to "priority" debts in an "asset case."