Knoxville Attorneys Clark & Washington Discuss Claims in Business Bankruptcy

    KNOXVILLE, TN, April 23, 2015 /24-7PressRelease/ -- The Knoxville bankruptcy attorneys at Clark & Washington wish to inform the public on how creditor claims affect your bankruptcy. The priority with which your debt with a creditor is paid off is determined by the creditors claim type.

Claims & Bankruptcy

When your business files for bankruptcy, there are likely to be several creditors to which you are indebted. According to the Knoxville bankruptcy lawyers, the order in which these creditors are paid off depends upon whether the creditor has a secured, unsecured or under-secured claim against you.

Secured claims are always paid first. These exist when a creditor has a security interest in your property or has collateral against your. Typical secured claims are mortgages or auto loans. Priority claims are a subset of secured claims that take the highest priority, even above other secured claims. These typically include alimony, child support, administrative fines and unpaid taxes.

Unsecured claims are secondary to secured claims because a creditor has no collateral and no security interest in your property. Credit cards, student loans, utility bills and medical bills are common forms of unsecured claims.

Under-secured claims are neither secured nor unsecured. These are claims where a creditor has collateral against the debtor and the collateral has depreciated in value so that when the collateral is sued to pay of the debt, it fails to cover the full amount owed. You may still have to pay the remaining balance at a later date if you open up your business again.

When your business files for bankruptcy, a bankruptcy trustee will be appointed to raise enough money to pay off all of your claims. This will be done by selling off your business assets. If the trustee fails to raise enough money to pay off all the creditor claims against your business, you will still be responsible for paying off the remaining amount if and when your business goes back into business. Whenever you have a business filing for bankruptcy, a Knoxville bankruptcy lawyer is essential.

Established in 1983, Clark & Washington is now one of the leading bankruptcy filers in the Southeast. They have locations in Georgia, Florida and Tennessee. Clark & Washington specializes in personal chapter seven and 13 bankruptcy. They offer honest, helpful legal advice to those experiencing financial hardships.

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