Priority Debts in Bankruptcy: What Gets Paid First

In bankruptcy, not all debts are treated the same — and the category a debt falls into usually matters more than how big it is. A $2,000 child support arrearage and a $2,000 credit card balance are not equals in a bankruptcy case: the support debt is a priority debt that must be paid ahead of ordinary creditors and almost never goes away, while the credit card debt is general unsecured debt that sits at the back of the line — and is exactly the kind of debt Chapter 7 or Chapter 13 is built to wipe out.

Understanding this pecking order helps explain why two people with the same total debt can walk out of bankruptcy in very different positions. Bankruptcy is a legal right and, for many people hit by job loss, medical bills, or divorce, a genuine fresh start — but which debts survive depends far more on their category than on their size.

The basic sorting: secured, priority, and general unsecured

Every debt in a bankruptcy case falls into one of three broad buckets:

• Secured debt — tied to collateral, like a mortgage or car loan. It's handled separately based on the property, not the priority rules discussed here.
• Priority unsecured debt — a short list of debts Congress decided deserve to be paid first and, in most cases, protected from discharge. This includes recent taxes, domestic support obligations (child support and alimony), and a few narrower categories like certain unpaid wages owed to employees.
• General unsecured debt — everything else: credit cards, medical bills, personal loans, old utility bills, most lawsuit judgments. This is paid last, often gets little or nothing, and is usually the debt that gets discharged.

What makes a debt "priority" — 11 U.S.C. § 507

The priority order for unsecured claims comes straight from the Bankruptcy Code, 11 U.S.C. § 507(a), which lists specific categories of claims in a set order and says they must be paid ahead of ordinary unsecured creditors when there's any money to distribute. For an individual consumer filing, the categories that come up most often are:

• Domestic support obligations — child support and alimony/spousal support (including amounts assigned to a state child-support agency). Congress moved these to the very top of the priority list, generally ahead of even the trustee's own administrative fees.
• Administrative expenses — the costs of running the bankruptcy case itself, like trustee fees and approved professional fees. This isn't old debt you owed before filing; it's the cost of the case.
• Certain unpaid wages, commissions, and employee benefit contributions — mainly relevant if you owed wages to employees before filing (for example, a small business owner). These categories carry dollar caps that are adjusted for inflation periodically.
• Certain recent tax debts — income taxes for recent tax years, trust-fund payroll taxes, and some property taxes fall into a priority tax category under § 507(a)(8). Whether a specific tax debt is "recent" enough to count depends on statutory look-back periods tied to when the return was due, when it was filed, and when the tax was assessed.
• Certain claims for death or injury caused by driving under the influence — a lower-ranked priority category under § 507(a)(10).

You can read the full, current text of the statute directly at the official U.S. Code source (govinfo.gov or law.cornell.edu) and see plain-language overviews on the U.S. Courts' bankruptcy basics pages, since the exact paragraph numbering and the dollar caps in some sub-categories are periodically adjusted for inflation or amended by Congress.

Why the category matters more than the amount

Priority status matters in two separate ways, and people often only think about the first one:

1. Priority debts get paid first — if there's money to pay anyone

In a Chapter 7 case, most individual filers have no non-exempt assets for the trustee to sell, so there's nothing to distribute to any unsecured creditor, priority or not. In an "asset" Chapter 7 case, or in Chapter 13, the order in § 507(a) controls who gets paid first out of whatever funds are available — priority claims in full before general unsecured creditors see a dime.

2. Priority debts usually survive the bankruptcy — even without a distribution

This is the part that surprises people. Domestic support obligations and most recent tax debts are also carved out from discharge under 11 U.S.C. § 523(a). So even in a no-asset Chapter 7 where nothing gets paid to anyone during the case, a priority debt like child support or a recent tax year typically survives the bankruptcy and you still owe it afterward — while an ordinary credit card balance of the same size is erased.

That's why the category of a debt tells you far more about its fate than the dollar amount does.

How this plays out by chapter

• Chapter 7: Priority debts almost never get paid through the case itself (there's usually no fund to pay from), but because most are also nondischargeable, you come out the other side still owing them in full.
• Chapter 13: The law requires your repayment plan to pay priority claims in full over the life of the plan as a condition of the plan being confirmed. You must also stay current on any domestic support obligation that comes due after you file, or the court can refuse to confirm your plan or grant your discharge. See the U.S. Courts' Chapter 13 bankruptcy basics page for the confirmation requirements.

Two priority debts worth understanding on their own

Because they're the priority debts that trip up the most filers, it's worth reading in depth about how each one actually behaves in a bankruptcy case:

• How tax debt is treated in bankruptcy — including when older tax years can become dischargeable and when they can't.
• How child support and alimony are treated in bankruptcy — including why these obligations are never wiped out, in any chapter.

What to do

1. List every debt by category, not just by amount. Separate out any child support/alimony, recent tax years, and anything you might owe employees. These need special handling regardless of size.
2. Check timing on tax debts before you assume anything is dischargeable. Whether an income tax debt is priority (and nondischargeable) or old enough to potentially be discharged depends on specific date-based rules. The IRS's Bankruptcy Tax Guide (Publication 908, at irs.gov) walks through how these rules apply.
3. Never assume filing erases support arrears. If you're behind on child support or alimony, bankruptcy does not touch that obligation, though a Chapter 13 plan can sometimes give you a structured way to catch up on the arrears over time while keeping current payments on track.
4. Confirm current numbers on the official sites before relying on any figure. Filing fees, means-test income figures, property-exemption amounts, and Chapter 13 debt limits change periodically. Check uscourts.gov and the U.S. Trustee Program means-test data at justice.gov/ust for the current figures rather than relying on any number you find elsewhere.
5. Talk to a bankruptcy attorney, especially if priority debts are involved. Getting the chapter, the plan payments, or the timing of a tax debt wrong can be expensive and hard to undo. Many attorneys offer free consultations, and if cost is a barrier, legal aid organizations, law-school clinics, and court self-help centers can help.

A note on scams

Be wary of for-profit debt-settlement or debt-relief companies that promise to "negotiate away" tax debt or child support — these obligations generally cannot be settled that way, and such companies often charge large upfront fees for little or no result. Also avoid non-attorney "petition preparers" who offer legal advice about which debts are priority or dischargeable; by law they can only type up the paperwork you direct, not advise you. A qualified bankruptcy attorney, or a U.S. Trustee–approved credit counseling agency for the required pre-filing course, are the reliable paths.

Takeaways

• Priority debts — mainly recent taxes, child support/alimony, and a few narrower categories under 11 U.S.C. § 507(a) — are paid first and generally are not discharged.
• General unsecured debt (credit cards, medical bills, most personal loans) is paid last, often gets nothing, but is usually wiped out — that's the core benefit of filing.
• The category of a debt, not its dollar amount, decides where it lands and whether it survives bankruptcy.
• Chapter 13 plans must pay priority debts in full; Chapter 7 usually can't pay them at all, so they typically survive the case unpaid.
• Never assume support or recent tax debt can be settled away by a for-profit debt-relief company — talk to a bankruptcy attorney or an approved counseling agency instead.

This article is general legal information, not legal advice, and does not create an attorney-client relationship. For your specific situation, consult a qualified bankruptcy attorney or a U.S. Trustee–approved credit counseling agency — and be cautious of for-profit debt-settlement companies and non-attorney petition preparers.