What is a priority claim?

A priority claim is a type of creditor’s claim that typically has a higher priority than other creditors in the event of a bankruptcy or insolvency. In California, priority claims are defined by the California Code of Civil Procedure Sections 703.010 and 703.020. In general, priority claimants are creditors who are legally entitled to be paid before other creditors are paid or before any money is given to the debtor. Priority claimants typically include certain governmental entities such as taxing authorities, certain secured creditors, costs of administering the bankruptcy, and wages, salaries, or commissions of employees for services rendered within 90 days prior to the debtor filing for bankruptcy. Priority claims must be paid in full before other creditors, such as unsecured creditors and secured creditors, can ever receive payment from the debtor. The amount of payment depends on the type of priority claim and the assets available for distribution. The amount of payment for priority claims can vary significantly, depending on the assets available for distribution and the claims secured by priority claimants. In California, priority claimants must prove their claim in order to receive payment from a bankruptcy estate. Priority claimants must file a Proof of Claim form with the court within 90 days of the debtor filing for bankruptcy. Failure to file a Proof of Claim form can result in the creditor not receiving any payment.

Related FAQs

What is a garnishment?
What is a creditors’ committee?
What is a “confirmation hearing”?
What are the different types of liens?
What is a “bankruptcy trustee”?
What is the meaning of “time’s up”?
What is a secured debt?
What is a lien avoidance action?
What is a writ of execution?
What is a non-dischargeability action?

What is a priority claim?

Related FAQs

Related Blog Posts