Treatment of Different Types of Creditors in Chapter 13
The laws about the treatment of different types of creditors can often be used in your favor to pay who you want or need to pay.
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.
When It’s Worth Objecting to a Proof of Claim
If a creditor's proof of claim is a "priority" or secured debt is too high, object to it to avoid paying too much in your Chapter 13 case.
Objecting to a Creditor’s Proof of Claim in Chapter 13
If you object to a creditor's proof of claim in your Chapter 13 case, and prevail in that dispute, you pay nothing on that debt.
Potentially Pay Nothing to Most Creditors in Chapter 13
In some jurisdictions you can pay nothing to your "general unsecured" creditors, if all your money goes to paying higher priority ones.
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.
“Priority” Debts for Injuries from Driving while Intoxicated
If you injured someone by unlawfully driving while intoxicated, the resulting obligation can't be discharged in bankruptcy.
“Priority” Wages and Benefits Owed to Employees
If you owe an employee wages or benefits, it's likely a priority debt. Same if you are owed wages or benefits. More likely to be paid.
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."
“Priority” Debts in Bankruptcy
What makes "priority" debts so special?
“General Unsecured” Debts Discharged in Chapter 13
To the extent you do not pay off your debts during a Chapter 13 payment plan, the remaining balance is usually legally written off forever.
Debts Partly Paid but then Written off in Chapter 7
If you have an "asset" Chapter 7 case, some or all of your debts are partially paid, with most or all of the remaining amounts written off.
“General Unsecured” Debts Discharged in Chapter 7
In most straightforward Chapter 7 cases all debts not secured by any collateral are discharged--forever written off. You pay nothing on them.
How Chapter 7 Deals with Special Debts that Can’t Be “Discharged”
Bankruptcy can't write off certain kinds of debts. Chapter 7 may give you enough help to avoid liens on your home from those debts.