What is the meaning of “priority debt”?

Priority debt in Tennessee is a debt that a creditor is entitled to receive payment for prior to any other debt in the event of a financial situation that results in an inability to pay all creditors. Priority debt may include some taxes, court-mandated payments, child support and alimony, and certain kinds of secured debt, such as a mortgage or home loan. In the event of a bankruptcy, creditors with priority status are paid first. In Tennessee, priority debts are ranked in accordance with Tennessee Code Annotated § 26-2-301. In other words, certain creditors will be paid before other creditors will if a debtor has multiple debts. When it comes to priority debt, creditors may also be able to access collateral or assets that a debtor has to secure payment. This may allow the creditor to recoup some of the debt before other creditors can get paid. This occurs in cases of foreclosure, repossession, and other debt collection attempts. Creditors with priority status are also more likely to be successful in collecting a debt. In general, priority debt is a debt that a creditor chooses to protect and prioritize when collecting debts from a debtor. Priority debt is given special attention and consideration when it comes to collecting past due payments. In Tennessee, certain types of debt will always have priority status and those creditors will be placed in a priority position when it comes to collections proceedings.

Related FAQs

What is a preference action?
What is an assignment for benefit of creditors?
What is the meaning of “unsecured debt”?
What is a judgment lien?
What is a lien avoidance action?
What is the Uniform Commercial Code (UCC)?
What are the consequences of violating creditors’ rights laws?
What is a proof of claim?
What is a levy?
What is a creditors’ rights attorney?

What is the meaning of “priority debt”?

Related FAQs

Related Blog Posts