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Debts and discharge

Priority claim

In bankruptcy, a priority claim is an unsecured claim that is entitled to be paid ahead of other unsecured claims. 1

How it works

Priority is the Bankruptcy Code's ranking of unsecured claims. It sets the order in which they are paid when there is not enough money to pay all of them in full, and the table shows that order. 1

For people who file, the categories that come up most are domestic support obligations, such as child support and alimony, which come first, and most taxes. In a Chapter 7 case with assets to distribute, the ranking decides which unsecured creditors are paid first. 2 1

In Chapter 13, the plan must pay priority claims in full unless the creditor agrees to different treatment. There is an exception for a domestic support obligation when the debtor contributes all disposable income to a five-year plan. 3

What it covers

The order of priority claims
Rank	Type of claim
First 2	Domestic support obligations owed to a spouse, former spouse or child 2
Second 2	Administrative expenses of the bankruptcy case 2
Third 2	Certain claims that arise in an involuntary case before the order for relief 2
Fourth 2	Wages, salaries or commissions earned within 180 days before filing, up to a cap 2
Fifth 2	Contributions owed to an employee benefit plan 2
Sixth 2	Certain claims of grain producers and fishermen 2
Seventh 2	Deposits paid for personal or household goods or services never delivered, up to a cap 2
Eighth 2	Certain claims of governmental units, such as taxes 2
Ninth 2	Commitments to a federal bank regulatory agency 2
Tenth 2	Claims for death or injury caused by driving a vehicle or vessel while unlawfully intoxicated 2

The statute caps some categories at dollar amounts that change over time, so they are left out here.

Common questions

Are priority debts wiped out by a discharge?

Priority is about the order of payment, not discharge. Several priority debts, including child support, alimony and certain taxes, are generally not discharged in Chapter 7. 1 4

What is the difference between priority and nonpriority unsecured claims?

Priority claims are paid before other unsecured claims. Nonpriority claims, such as most credit card and medical bills, share what is left, and a Chapter 13 plan need not pay them in full. 1 5 3

Sources

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