What is the meaning of “priority debt”?

Priority debt is a type of debt that is given priority status when a debtor is unable to repay all of their creditors. In the event of a bankruptcy, priority debts are the first creditors to be paid. This ensures that the most important creditors are paid first, such as those that are secured by collateral or those that are deemed necessary to protect the public interest. In California, taxes, child support, and alimony are all given priority debt status. Additionally, certain types of loans, such as those taken out to purchase a home, are given priority status. This means that these debts will be paid off before other types of debts, such as medical bills and credit card debt. Priority debt places the creditor’s interest ahead of other creditors, and is often used to protect more important creditors.

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What is the meaning of “priority debt”?

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