How does the bankruptcy court decide which creditors will get paid?

The bankruptcy court in Delaware will decide which creditors should get paid based on the priority of their claims. Priority claims are those which are considered more important than other types of debt, such as taxes or child support. These creditors will be paid first out of any money available to the debtor. Other creditors will be paid based on the amount of money available after the priority creditors have been paid. The court will also examine the debtor’s assets and liabilities to determine how much money is available to pay creditors. The court will also review the debtor’s financial activity for the 90 days prior to filing for bankruptcy in order to determine if any of the debts were incurred improperly or fraudulently. The court may also consider which creditors are secured and which are unsecured. Secured creditors are creditors who had their debt secured by collateral, such as a car or home. Unsecured creditors were not able to secure their debt and are paid after all secured creditors. The court may also consider the type of debt the creditor holds. For example, priority creditors, such as tax debt, will be paid before creditors with unsecured debt. In the end, the court will consider all of the debtor’s assets and liabilities, and the type and priority of debt held by creditors in order to decide which creditors should get paid.

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How does the bankruptcy court decide which creditors will get paid?

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