Utah Bankruptcy Law and Tax Claim Priority
In all cases, claim priority status is assigned based on the type of debt involved. Most claims are simple: either secured or unsecured. Yet a third class, known as "priority claims" encompasses many unusual, governmental, and highly protected classes of debts owed to others. many of these classifications are determined under Utah bankruptcy law, such as the nature of taxes, fines, penalties, assessments, and statutory liability for debts created without the permission of others (i.e. judgments for child support, negligence, personal injuries, and damages caused by DWI or DUI).
In Utah Chapter 7 bankruptcy cases, priority debts are not subject to discharge. They remain payable in most circumstances, but of course, there are exceptions. Chapter 13 provides more interesting and more lucrative options for the disposal of priority debts. Taxes, fines and penalties may be included within the plan, are paid first before general unsecured creditors receive payment. This preference given to taxes and other priority debts creates an opportunity for debts to repay priority debts, repay past due mortgage amounts, and then convert the case to Chapter 7. Once converted under Utah law, all remaining unsecured debts may be discharged without further payment.
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