Legal Question in Bankruptcy in New Jersey

Re: Violence in the work place

First, the claim must be "unsecured"; thus, the indebtedness will not be secured or collateralized by real and/or personal property. A mortgage loan, for example, is secured to the extent of the value of the real property encumbered by the recorded mortgage. Second, the debt must have arisen prior to the filing of the bankruptcy petition. Third, the debt in question must not be not included in Section 507 of the Bankruptcy Code as being entitled to priority status. Section 507(a) of the Code enumerates in order of priority status certain types of pre-petition unsecured claims/debts that, as a matter of legislative policy, are entitled to priority in terms of receiving a distribution from a bankruptcy estate if there are sufficient funds available. For example, certain types of taxes are granted priority status under Section 507 of the Code. Wage claims up to a certain amount and earned within a certain period of time prior to the filing of a bankruptcy petition are granted priority status; and, priority wage claims have a higher priority status than priority tax claims under the Code, meaning that all priority wage claims in a case must be paid in full from available estate funds before any payment is made to prioty tax claims. Section 507 of the Code enumerates in order of priority various kinds of pre-petition unsecuerd debt that are deemed to have priority status under the Code for purposes of distribution. Generally speaking, the last category of debt to be entitled to a distribution under the Code is non-priority unsecured debt. Most pre-petition unsecured claims are not entitled to priority status under Section 507 of the Code. For example, pre-petition general trade debt of a debtor business, credit card debt, and most unsecured loans are classified as unsecured non-priority claims. Note that before any distribution can be made to pre-petition unsecured creditors, all categories of priority debt in the case (including post-petition administration debt and pre-petition unsecured debt) must be paid in full.