In a Chapter 7 “asset” case, what forumula is used to allocate and disburse liquidated assets to creditors?

Asked on July 11, 2014 under Bankruptcy Law, Missouri


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

Certain priority debts, such as tax debts, child support, costs of the bankruptcy, and wages owed to employees, if such exist, are paid first. After that, other debts are paid on a pro rata basis. For example: say that $120,000 is owed, and the liquidated assets bring in $30,000, or one 1/4 of that. Each creditor would get $0.25 on the dollar.

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