Debtor - Creditor Relationships - Bankruptcy - Distribution of Debtor's Estate

Question 1

List the top four categories in the order of distribution in a bankruptcy hearing.

Answer 1

1. Secured parties;
2. Child support;
3. Bankruptcy administration costs (trustee, accountant, lawyer, appraisal fees etc.);
4. Gap creditors.

Question 2

What is the treatment of perfected secured claims beyond the value of collateral?

Answer 2

General creditor claim.

Question 3

List the order of distribution of a bankruptcy estate after the gap creditors have been paid.

Answer 3

1. Employee/commission claims up to $12,475; (earned within 90 days prior to filing)
2. Employee pension contributions to $12,475, less the amount received as wages;
3. Farms/fishers;
4. Consumer deposits;
5. Taxes;
6. DUI damages;
7. General creditors.