Priority Debt definitions & Question

[FloridaGuy]

Can anyone point me to the actual definitions or rules of priority debt? Also, are priority debts paid in full or do they get partial payments? We suspect we will be a chapter 7 asset case.

[HHM]

Priority debts simply take priority, meaning they get paid first.

Section 507 of the BK code lists the priorities.

Priority debts don't necessarily need to be paid in full, but some priority debts are also non-dischargeable, so if you have a priority debt that is non-dichargeable, and you don't have enough assets to pay that debt in the BK, you will still owe the unpaid balance after your BK is over.

[AngelinaCatHub]

Priority debts simply take priority, meaning they get paid first.

Section 507 of the BK code lists the priorities.

Priority debts don't necessarily need to be paid in full, but some priority debts are also non-dischargeable, so if you have a priority debt that is non-dichargeable, and you don't have enough assets to pay that debt in the BK, you will still owe the unpaid balance after your BK is over.

Not to take this thread, but IRS, would it be paid first and formost if there are no other tax debts? Would the whole amount of an asset payback go to IRS or a compromise of paying back an insider payment? Thanks 'Hub

[HHM]

An insider payment is a different issue, that is not a debt. An insider payment is a transfer of an asset so you must pay the trustee the value of that transfer. Priority debts get first claim on any funds the trustee gets from your assets.

[FloridaGuy]

Thanks

My question had more to do with employee wages. Originally it was going to be a barter type situation. However, since the business will be closing due to the BK... I am unable to pay them now with goods, as it will look like an asset transfer. And unfortunately do to the rapid downturn in sales, I am barely able to pay electricity bills, etc. Let alone the built up pay.