Priority debt is a type of debt that is given priority over other debts. They are considered to be more important due to their legal or practical nature. Here are a few examples that you need to take note of.
Tax Debts
Tax debts like income, payroll, and sales taxes are considered priority debts because they are owed to the government.
Government Claims
The government may claim payments for overpaid government benefits. These claims receive priority.
Domestic Support Obligations
Domestic support obligations are debts owed to a child, spouse, or former spouse for alimony or support. Providing financial support to dependents is a legal and social responsibility.
Employee Wages and Benefits
Wages, commissions, pensions, and all sorts of employee benefits owed to workers are priority debts.
Court Fines
Fines, penalties, and restitution payments ordered by the court are considered priority debts.
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