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

In Mississippi, the bankruptcy court will decide which creditors get paid by determining the priority of each creditor’s claim. The court will review the debt, the amount owed, and the security of the debt. Priority creditors are those that are the most important for the bankruptcy court to pay. Federal taxes are considered to be a priority debt and must be paid before any other debt. Priority creditors are followed by secured creditors, which are creditors who have a right to the debtor’s property in the event of nonpayment. The court will decide to pay the secured creditors if there is enough money to cover the debt. Unsecured creditors do not have any rights to the debtor’s property and are the lowest priority creditors. Unsecured creditors can only be paid after secured and priority creditors can be paid. The court will determine how much each unsecured creditor will be paid, if any, and the amount will be dependent on how much money is available to pay back the debt in full. Once the court has decided which creditors will get paid, the order in which the creditors get paid will be based on the priority of each creditor’s claim.

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

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