By William Waldner, Esq.
When you file for bankruptcy, not all debts are treated equally. A small group of obligations—called priority debts—move to the front of the payment line and are paid before most other creditors. They can also survive your discharge, which makes understanding them essential before you file. Here is what priority debts are, how they are ranked, and how they play out in Chapter 7 and Chapter 13 in New York.
What Are Priority Debts in Bankruptcy?
Priority debts are specific obligations that the Bankruptcy Code requires be paid ahead of general creditors. The ranking system lives in Section 507 of the Bankruptcy Code, and it drives how the trustee distributes money from your bankruptcy estate. In Chapter 7, priority claims are paid first from any non-exempt assets; in Chapter 13, they generally must be paid in full through your repayment plan.
The reason certain debts get priority usually comes down to public policy—protecting dependents, paying the workers and professionals who keep the case running, or securing the government’s tax revenue.
The Main Categories of Priority Debt
Section 507(a) lists the priority classes in order. The ones consumers encounter most often are:
1. Domestic Support Obligations
Child support and alimony sit at the very top of the list. These debts cannot be discharged and must be paid in full, a reflection of how strongly the law protects dependents.
2. Administrative Expenses
These are the costs of running the case itself—the trustee’s fees, approved attorney fees, and court filing fees. (The court’s own Chapter 7 filing fee is $338.) Paying them keeps the bankruptcy system functioning.
3. Certain Recent Taxes
Many income taxes are priority debts, typically those due within roughly three years of filing, along with some property and employment taxes. Older income taxes that satisfy strict timing rules may instead be non-priority and potentially dischargeable—a distinction we cover in our guides to unpaid taxes in bankruptcy and whether you can discharge New York State taxes in Chapter 7.
4. Unpaid Wages and Benefits
Wages, salaries, and commissions an employer owes workers for the 180 days before filing are priority, up to $17,150 per employee, with a matching cap for employee benefit-plan contributions. This category mainly affects business filers.
5. Consumer Deposits
Money individuals paid as deposits for goods or services they never received is priority up to $3,800 per person.
The list also includes certain fines owed to government units and claims for death or injury caused by operating a vehicle, vessel, or aircraft while intoxicated—both priority and non-dischargeable. The current dollar figures reflect the adjustments effective April 1, 2025, published in the Federal Register, and apply to cases filed on or after that date.
Priority vs. Secured and General Unsecured Debts
Priority debts are one of three broad categories. Secured debts are backed by collateral, like a mortgage or car loan, and are paid from that collateral. Priority unsecured debts—the subject of this article—have no collateral but jump ahead of ordinary creditors. General unsecured debts, such as credit card balances and medical bills, sit at the bottom and often receive little or nothing. Which of your assets the trustee can reach depends on what is included in your bankruptcy estate.
| Debt Category | Backed by Collateral? | Payment Order | Common Examples |
|---|---|---|---|
| Secured | Yes | Highest (from collateral) | Mortgages, car loans |
| Priority Unsecured | No | Middle | Support, recent taxes, administrative expenses |
| General Unsecured | No | Lowest | Credit cards, medical bills |
Chapter 7 vs. Chapter 13
In Chapter 7, priority debts are paid first from any non-exempt assets—but most priority debts, like recent income taxes and support obligations, are not wiped out by your discharge, so you remain responsible for any unpaid balance. In Chapter 13, your Chapter 13 repayment plan must pay priority debts in full, which is often why a plan runs the full five years. The trade-off is a structured way to catch up on past-due support or taxes without aggressive collection. The U.S. Courts’ Chapter 13 Bankruptcy Basics overview explains how plans treat these claims.
Handling Priority Debts Wisely
Identify every priority debt early, keep current on support and recent taxes, and weigh whether Chapter 13’s structured repayment fits your situation better than Chapter 7. Because these debts can survive bankruptcy, they belong at the center of your planning—and of any honest conversation about what bankruptcy costs in NYC. An experienced attorney can make sure each debt is classified correctly so nothing surprises you later.
Not Sure Which of Your Debts Are Priority?
Law Office of William Waldner — 469 Seventh Avenue, 12th Floor, New York, NY 10018 Call 212-244-2882 to schedule your free, confidential 20-minute consultation. We handle bankruptcy cases exclusively, in the Southern and Eastern Districts of New York.
