What Is a Priority Claim in Bankruptcy?

Many people think that all of the debtor's creditors get left out in the cold when someone files for bankruptcy, but that's not always the case. In virtually all Chapter 13 cases and some Chapter 7 cases, money is available to pay creditors.

But creditors don't get paid automatically. Before receiving funds, a creditor must submit a "proof of claim" to the court using an official proof of claim form. And not all creditors' debts receive the same treatment.

A priority claim is a debt entitled to special treatment and will get paid before nonpriority claims. When filling out the proof of claim form, the creditor indicates whether a priority status exists by checking "yes" in box 12.

The bankruptcy trustee—the court-appointed individual responsible for overseeing the case—will review all submitted claims. After resolving objections and confirming the plan in Chapter 13 bankruptcy, the trustee will distribute funds to priority creditors. If money remains, the trustee will pay claims without priority status.

Here are examples of common priority claims:

• costs to administer the bankruptcy (such as accounting or legal fees)
• child and spousal support obligations
• up to $15,150 in compensation earned 180 days before bankruptcy (wages, commissions, and other compensation)
• up to $15,150 in contributions to an employee benefit plan
• up to $3,350 for deposits given to the filer to secure personal products, services, or housing in the future
• up to $7,475 to a fisherman for unpaid fish sold to a storage or processing facility
• taxes owed to the government, and
• injury or death claims caused by an intoxication-related motor vehicle or boat accident.

These figures are effective as of April 1, 2022, and remain valid through March 31, 2025.

All creditors seeking payment in a Chapter 13 case must file a claim. In a Chapter 7 case, the court will instruct creditors to submit claims if it appears that the case is an "asset case," meaning that money will be available for distribution. By contrast, creditors won't submit claims in a "no-asset case."

For additional information, read Priority Debts in Chapter 7 Bankruptcy and Types of Creditor Claims in Bankruptcy: Secured, Unsecured & Priority.

Need More Bankruptcy Help?

Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated April 23, 2022