What is a priority creditor?

A priority creditor is a creditor with a special legal right to be paid first when debts are collected. This is particularly relevant in bankruptcy cases, as all creditors involved must be treated fairly. In California, priority creditors are entitled to a higher order of protection than other creditors. Priority creditors have the right to be paid ahead of non-priority creditors in certain circumstances. For example, in California, priority creditors are entitled to repayment of debts incurred for the necessary support of the debtor or the family of the debtor, court costs incurred in the enforcement of a judgment, and certain taxes owed to the state or federal government. Other priority creditors may also be entitled to repayment. This includes wages owed to employees, and debts owed to certain business contractors, such as security deposits, rental deposits, trust fund deposits, and debts arising from certain types of contracts. It is important to note that priority creditors may only receive payment ahead of other creditors in certain circumstances. If a debtor has sufficient funds to pay all creditors, priority creditors will be paid first, but only after the other creditors have been paid. Overall, a priority creditor is a creditor with a special legal right to be paid first when debts are collected. Priority creditors are entitled to a higher order of protection than others in California, meaning that certain debts will be paid first in certain circumstances.

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What is a priority creditor?

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