Chapter 13 bankruptcy allows you to reorganize your debt and create a reasonable payment plan to offload some or all of your debt. These payments plans typically last between three and five years before the remaining amount is discharged. When it comes time to create your plan for repayment, you may notice that some of your creditors are given priority over the others.
What Are Priority Claims in Chapter 13 Bankruptcy?
Once you’ve filed for Chapter 13 bankruptcy, your creditors will be categorized by their different types, including:
- Priority Claims
- Secured Claims
- Unsecured Claims
- Nonpriority unsecured claims
Priority claims are debts that have been deemed nondischargeable through bankruptcy, and are to be paid in full through your repayment plan. Just because these debts are labeled nondischargeable does not mean that Chapter 13 bankruptcy will not help you take care of them. In fact, many people who file for Chapter 13 do so for the express purpose of getting assistance in paying off these debts.
When you create your repayment plan, the bankruptcy court will review your debts, expenses, and income to determine how much of your payments should go to each creditor. The plan will have to work so that you can pay off your priority claims within the five-year limit.
Which Debts Are Considered Priority Claims in Chapter 13 Bankruptcy?
Some of the claims which commonly qualify as priority claims include:
- Recent taxes
- Payments owed to employees
- Contributions to employment benefit plans
- Child support or alimony payments
- Court ordered payments for personal injury or wrongful death cases
For more information, call or fill out an online form for a free consultation, and find out how Washington D.C. bankruptcy lawyer Kevin D. Judd can help you achieve financial freedom.