About Schedule E And Priority Debts

About Schedule E And Priority Debts

Bankruptcy requires debtors to provide information about every aspect of their financial state. This is primarily accomplished through the bankruptcy schedules, which are a series of forms that every debtor must prepare and file with the bankruptcy court within 14 (fourteen) days of filing the bankruptcy petition.  The bankruptcy schedules must be completed accurately since debtors complete and file them under penalty of perjury.

In 2015, Congress amended most of the official forms used for bankruptcy cases with the goal of making them easier to read and, as a result, likely to generate more complete and accurate responses. One such form was Form B6E, Creditors Holding Unsecured Priority Claims, otherwise known as Schedule E.

Congress determined that certain unsecured claims, primarily taxes, should receive priority over unsecured claims such as credit cards. More importantly, this distinct, special classification means that these claims are not eligible for discharge and must be paid by bankruptcy debtors. Priority claims are a mechanism to give certain unsecured claims priority over other non-qualifying unsecured claims.

Form B6E thus became Official Form 106E/F, Schedule E/F: Creditors Who Have Unsecured Claims. This form consolidates information about priority and nonpriority unsecured claims into a single form. It replaces Official Form B6E, Creditors Holding Unsecured Priority Claims, and Official Form B6F, Creditors Holding Unsecured Nonpriority Claims, in cases of individual debtors.

Thus, instead of two separate forms, there is just one form for all unsecured priority and nonpriority claims. Although both priority and nonpriority unsecured claims are reported using Official Form 106E/F, the two types of claims are separately grouped. One reason for this is so that the total for each type of claim can be reported for case administration, as well as statistical purposes.

Schedule E includes four checkboxes for identifying the type of priority that applies to a claim:

  • domestic support obligations (e.g., alimony, child support);
  • taxes and certain other debts owed to the government (e.g., income taxes);
  • claims for death or personal injury while intoxicated; and
  • other.”

The first three categories are required to be separately reported for statistical purposes. If the debtor selects “other,” the debtor must specify the basis of the priority, e.g., wages or employee benefit plan contribution.

Examples of priority claims include

  • domestic support obligations;
  • extensions of credit in involuntary bankruptcy cases;
  • wages, salaries, and commissions;
  • contributions to employee benefit plans;
  • claims of certain farmers and fishermen;
  • deposits by individuals;
  • taxes and debt owed to governments;
  • commitments to maintain the capital of an insured depository institution; and
  • claims for death or injury while the debtor was intoxicated.

Despite the instructions on Schedule E/F, it is often difficult for a debtor to ascertain whether an unsecured debt should receive priority or nonpriority status. As Schedule E lists certain debts that are “priority,” its completion may be complicated and require discussion with a seasoned bankruptcy professional. Debtors must know which unsecured debts receive a higher priority status since unsecured priority debts may not qualify for discharge and must be paid by the debtor. Unsecured nonpriority debts qualify for discharge.

The Morrison Law Group has extensive experience helping debtors determine the classification of debts, whether secured, unsecured, or priority, in anticipation of bankruptcy. We can help you if you just want to talk about your bankruptcy options. Call 801.456.9933 today to schedule a FREE consultation. We are Utah’s only statewide bankruptcy law firm and have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.

About Schedule E And Priority Debts

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Theron Morrison

Utah’s top bankruptcy and consumer protection attorney.