A priority debt is one that the judge deems significant enough to be given precedence over others. Why are you concerned with this? If the judge approves your bankruptcy petition, a portion of your obligations will be discharged. This is the primary reason why the majority of individuals petition for bankruptcy.
However, other debts will not be discharged. This implies that even after filing for bankruptcy, you will be required to repay these debts. In most instances, the debts that cannot be discharged fall under the category of priority debts. Since these debts cannot be discharged, you must ensure that any assets that are liquidated to settle your debts are applied first to your priority debts.
So what types of debts fell into the category of priority? Probably the most prevalent type is a tax debt. If you are behind on your income taxes, it is extremely unlikely that they will be forgiven. Child support is another important debt. The courts do not want you to be able to avoid your parental responsibilities by declaring bankruptcy. Similarly, alimony and spousal support debts are typically ineligible for discharge.
If you operate a business with a policy of contributing to employee benefit plans, these plans are typically classified as a priority debt.
As you and your bankruptcy attorney examine your financial documents, it will become evident which debts you will still be responsible for if your bankruptcy petition is granted.
State-by-state norms for determining which debts fall into the priority category vary. Before you file for bankruptcy, you should consult with a bankruptcy counsel who has experience in your state to determine which debts are likely to fall into this category. He will help you determine whether filing for bankruptcy is your best financial option.""
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