This post is the third in a three part series on bankruptcy and creditors’ rights. If you haven’t already read parts 1 and 2, I recommend you do before continuing.
What is claim priority in a bankruptcy and what does it mean?
Perhaps the most important characteristic of a bankruptcy is that is brings all of the debtor’s assets and all of their debts into the same arena so the court may weigh one against the other. When it comes time for creditors to get paid, the court will use claim priority to determine who gets what. The tricky thing about priority is that typically higher priority claims will be paid in full before lower priority claims see a dime. For more information on priority and the order of payment used by the bankruptcy court, check out our page on creditors’ rights in bankruptcy.
Does priority mean I have to repay money my debtor paid me?
In some cases, yes, it can mean exactly that. If your debtor paid you, but not other creditors who actually had higher priority, then you will have to hand that money over to the bankruptcy trustee. However, it is important to note that this rule only applies to payments made in the 90 days prior to the bankruptcy filing, so be sure to check the accuracy of that date against your own records. If you find yourself in this situation, you should seriously consider retaining an experienced bankruptcy attorney to ensure your rights and interests are protected.
Why choose New Mexico Financial law?
Bankruptcy cases can be complicated. That’s why you need an attorney who specializes in bankruptcy, and the more experience they have the better. Don Harris has over 25 years of experience practicing financial and bankruptcy law in New Mexico. He also is one of few attorneys with a wealth of experience representing creditors in bankruptcy cases. Furthermore, he’s currently the only attorney in the state of New Mexico who is certified in both business bankruptcy law and consumer bankruptcy law by the American Board of Certification.
Call today to set up a consultation and ensure your rights as a creditor are protected!