When you file for Chapter 7 or Chapter 13 bankruptcy, you’ll have to complete and file something called Schedule E -- Creditors Holding Unsecured Priority Claims. On this form, you list unsecured creditors who are considered to be “priority.”
In Chapter 13 bankruptcy, these creditors (with the exception of child support claims assigned to a government agency) are entitled to be paid in full through your Chapter 13 plan. In Chapter 7, these creditors are entitled to be paid first out of your nonexempt assets (if you have any).
(To learn about the other forms you must file in Chapter 7 and Chapter 13 bankruptcy, see Completing the Bankruptcy Forms.)
How to Get Schedule E
You can find the most recent version of Schedule E on the U.S. Court’s website at www.uscourts.gov. To learn more about getting the official and other forms, see The Bankruptcy Forms: Getting Started.
What Is an Unsecured Creditor?
A creditor’s debt is unsecured if there is no item of property (like your house or car) serving as collateral for payment of the debt. If you fail to make payment on an unsecured debt, the creditor cannot take any of your property without first suing you and getting a court judgment. (There are a few exceptions to this rule.)
(To learn more about unsecured debts, see What Is an Unsecured Debt?)
What Is a Priority Claim?
Congress has decided that some debts deserve to be paid over others. These debts are called “priority” claims. Here are some of the most common priority debts (the full list is on the first page of Schedule E):
- Domestic support obligations.
- Wages, salaries, and commissions owed by you (as an employer) to a current or former employee that the employee earned within 180 days before you filed your petition or within 180 days of the date you ceased your business. In certain circumstances this also includes money owed to an independent contractor who did work for you. Only the first $12,475 owed per employee or independent contractor is a priority debt.
- Contributions to employee benefit plans if you are an employer.
- Money owed to a grain producer or U.S. fisherman for fish or fish products if you are a farmer or fisherman. Only the first $6,150 owed per person is a priority debt.
- Deposits by individuals. If you took money from people who planned to purchase, lease, or rent goods or services from you that you never delivered, you may owe a priority debt. For the debt to qualify as a priority, the goods or services had to have been planned for personal, family, or household use. Only the first $2,775 owed (per person) is a priority debt.
- Taxes and certain other debts owed to governmental units, such as unsecured back taxes or fines imposed for driving under the influence of drugs or alcohol. Not all tax debts are unsecured priority claims. For example, if the IRS has recorded a lien against your real property, and the equity in your property fully covers the amount of your tax debt, your debt is a secured debt and will be listed on Schedule D. And some tax debts are not priority debts, and will be listed on Schedule F.
- Claims against you for death or personal injury resulting from your operation of a motor vehicle or vessel while intoxicated from using alcohol, a drug, or another substance. This priority doesn’t apply to property damage—only to personal injury or death.
When In Doubt, Consult With an Attorney
If you’re not sure if a debt is entitled to priority, consult with an attorney. For example, not all tax claims are entitled to priority. If you list a nonpriority tax debt on Schedule E, you may be jeopardizing its dischargeability.
How to Complete Schedule E
In order to complete schedule E, you indicate what types of priority debts you have and then list them. The instructions at the beginning of the form are fairly self-explanatory. Here are a few tips about some of the information requested:
If someone else owes the debt with you, put an “x” in the second column of Schedule E. If the codebtor is your spouse and you are filing a joint bankruptcy, leave the column blank.
Husband, Wife, Joint, or Community?
The third column of Schedule E only applies if you are married. For each piece of property, state whether the husband owns the property (H), the wife owns the property (W), the husband and wife own the property jointly (J), or the property is community property (C). To learn more about property ownership among spouses, see Separate and Community Property During Marriage: Who Owns What?
If you are part of a same-sex married couple, how the court will treat your union, and how you should complete the forms will vary by district. It would be very wise to consult with a bankruptcy attorney familiar with these issues.
Date You Incurred the Claim and Consideration for the Claim
Here you put the date you incurred the debt and what the debt is for (for example, “goods purchased,” or “child support”).
Is the Claim Contingent, Unliquidated, or Disputed?
You must note whether a particular claim is contingent, unliquidated, or disputed. You may have to check more than one box. To learn what these terms mean, see When Is a Bankruptcy Claim Contingent, Unliquidated, or Disputed?
Amount of Claim
Generally, you list the amount it would take to pay off the debt in full. However, if your tax debt is partially secured and partially unsecured, you would only list the unsecured amount here. The secured amount would go on Schedule D.
Amount Entitled to Priority
Here you list the amount of the priority claim. Note that for some priority claims, there is a maximum amount that is entitled to priority (for example only $12,475 in wages owed to an employee is entitled to priority) – if the claim is for more than the maximum, only list the maximum. List the remaining amount in the next column, Amount Not Entitled to Priority.
This article provides general information only. There are many legal issues involved and important decisions to be made when filing for bankruptcy. You must understand the entire bankruptcy process, learn about the applicable federal and state laws, and determine how those laws will affect your particular situation before you complete the bankruptcy forms. If you want to file bankruptcy without a lawyer, use a good do-it-yourself book like Nolo's How to File for Chapter 7 Bankruptcy to ensure you make well informed decisions about your bankruptcy case.