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Glossary

Priority Debt

Priority debt is an unsecured debt that the Bankruptcy Code requires to be paid ahead of most other unsecured claims. 11 U.S.C. § 507 sets out the categories and their order — the most common in consumer cases are certain tax debts and past-due alimony or child support. Priority is about the order of payment, not about whether a debt survives bankruptcy.

Key points

  • Priority debt is unsecured — no creditor lien or collateral is involved.
  • 11 U.S.C. § 507 lists the priority categories and the exact order in which they are paid.
  • Domestic support obligations sit in the first priority category under § 507(a)(1).
  • Priority under § 507 and nondischargeability under § 523 are separate questions that often get confused.
  • The bankruptcy schedules ask you to sort unsecured claims into priority and nonpriority parts.

You have probably met this phrase on a bankruptcy form, a court notice, or a proof of claim, and it did not explain itself. It is a sorting term: bankruptcy divides what you owe into categories, and priority is one of them. Here is what it means and where it shows up.

What does "priority debt" actually mean?

A priority debt is an unsecured claim that the Bankruptcy Code requires to be paid before most other unsecured claims. Court materials describing the official forms define a priority unsecured claim as "a debt that the Bankruptcy Code requires to be paid before most other unsecured claims," giving certain income tax debts and past-due alimony or child support as the most common examples (U.S. Bankr. Ct. D. Alaska, The Forms Individuals and Married Couples Need to File Bankruptcy).

The word unsecured is doing real work. A secured claim is backed by a lien on specific property — a mortgage, a car loan. Priority debts have no collateral behind them; they simply hold a better place in line than ordinary unsecured claims like credit card balances and medical bills, which the same materials call nonpriority unsecured claims.

11 U.S.C. § 507 is the section that creates these categories and fixes their order.

  • Secured claim: backed by a lien on specific property.
  • Priority unsecured claim: no collateral, but paid ahead of other unsecured claims.
  • Nonpriority unsecured claim: paid last, and often paid little or nothing.

Why does priority matter in a bankruptcy case?

It matters because bankruptcy is, in part, a distribution system. Where there is money to distribute, the order in § 507 decides who gets paid first and who may get nothing. Domestic support obligations owed to a spouse, former spouse, or child of the debtor come first under § 507(a)(1). Administrative expenses of the case come second under § 507(a)(2). Certain tax claims sit further down the list.

One court's guidance puts the practical point plainly: in many consumer liquidation cases there is little or no money available from the estate to pay creditors at all (Bankr. D. Md. official page — Legal Overview). When that is true, the order in § 507 governs whatever there is.

Categories also carry through elsewhere in the Code. Section 724, for instance, uses the § 507 categories when a trustee distributes property subject to certain tax liens.

Three ways a claim can be classified
ClassificationWhat defines itWhere it is paid
SecuredA lien on specific propertyFrom that property's value
Priority unsecuredA category listed in 11 U.S.C. § 507Ahead of other unsecured claims
Nonpriority unsecuredEverything else unsecuredLast, from whatever remains

How does priority debt work in practice?

You meet it on paper before you meet it in a courtroom. The bankruptcy schedules split unsecured claims in two: the summary form asks separately for total priority unsecured claims and total nonpriority unsecured claims from Schedule E/F (Bankr. N.D. Ill. official guidance — Chapter 13 - Additional Documents).

Creditors meet it too. Official Form 410, the proof of claim, has a section where a creditor states whether any part of its claim is entitled to priority under § 507(a) (Bankr. M.D. Ga. official guidance — Proof of Claim Instructions). One court's own guidance notes that § 507 specifies which claims are entitled to priority, and that a creditor with questions about it should consult a bankruptcy attorney (Bankr. D. Haw. official page — Creditor).

A single claim can be split. If a secured creditor's claim exceeds the value of its collateral, the shortfall becomes an unsecured claim (Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Non-Individuals).

  • Schedule E/F separates priority from nonpriority unsecured claims.
  • A creditor asserts priority on Official Form 410.
  • Whether a claim is allowed at all is a separate question under 11 U.S.C. § 502.

What do people get wrong about priority debt?

The most common error is treating priority and nondischargeability as the same thing. They are different sections answering different questions. 11 U.S.C. § 507 sets the order in which claims are paid from the estate. 11 U.S.C. § 523 sets which debts an individual debtor is not released from at the end of the case. A debt can appear on one list and not the other, so a claim being paid first does not tell you whether it survives, and a debt surviving does not tell you it was paid first.

The two do interact in places — § 523(a)(1)(A) refers back to taxes of the kind specified in § 507(a)(3) or § 507(a)(8) — but interaction is not identity.

A second error is assuming priority means the debt gets paid. Priority sets position in line. Whether anything reaches that line depends on what the estate holds.

  • Priority (§ 507) answers: who gets paid first?
  • Dischargeability (§ 523) answers: what still exists afterward?
  • Priority is not a guarantee of payment — it is a position in a queue.

Frequently asked questions

Is child support a priority debt?
Yes. Allowed unsecured claims for domestic support obligations owed to or recoverable by a spouse, former spouse, or child of the debtor sit in the first priority category under 11 U.S.C. § 507(a)(1). Court guidance describing the official forms lists past-due alimony or child support as one of the two most common examples of a priority unsecured claim.
Are all priority debts nondischargeable?
No — those are separate questions governed by separate sections. 11 U.S.C. § 507 controls the order of payment; 11 U.S.C. § 523 lists the exceptions to discharge for an individual debtor. The two overlap in places, such as § 523(a)(1)(A)'s reference to taxes specified in § 507(a)(3) or § 507(a)(8), but neither list determines the other.
Is a mortgage or car loan a priority debt?
No. Those are secured claims, backed by a lien on specific property, and they are listed on a separate schedule from unsecured claims. Priority applies only within the unsecured category. Court guidance is also clear that a discharge does not eliminate a mortgage or security interest the debtor granted a lender; a valid lien can still be enforced against the property afterward.
Does state law change what counts as priority debt?
The priority categories in 11 U.S.C. § 507 are federal and apply in every bankruptcy court. What varies by state is other parts of a case — exemptions in particular — and those are covered on our state pages. Amounts stated in § 507 are also adjusted periodically, so check the current statutory text rather than relying on a remembered figure.

Sources

By Antonio G. Jimenez, Esq. · Florida Bar No. 21022

Sources verified July 28, 2026 · How we verify

Every figure on this page is drawn from a primary legal source and checked against our canonical legal database before publication. Bankruptcy.law is not a law firm and does not provide legal advice.

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