How Creditors are Treated in Georgia Bankruptcy Cases

In Georgia, bankruptcy creditors are ranked according to the type of debt. The most common types of creditors are:

  1. Secured creditors, such as mortgage companies and car creditors;
  2. priority creditors, such as tax entities and recipients of child support or alimony;
  3. lessors, such as landlords; and,
  4. unsecured creditors.

Although creditor statutes are important in Chapter 7 cases where there are assets that can be liquidated to pay back creditors, such statuses are more often utilized in Chapter 13 cases. In Chapter 13 cases,the monthly payment is usually not high enough to pay money to every creditor off the bat, and, depending on the debtor’s financial situation, some creditors will not be paid in full. That means that some creditors will get paid off first before others will.

A creditor’s rank determines when the creditor will get paid. For example, a typical Chapter 13 plan pays car creditors first, then other secured creditors, priority creditors, and, finally, unsecured creditors. Car creditors are normally given such prime treatment under the theory of “adequate protection.” That is, because a car creditor’s loan is connected to the vehicle, the creditor has an interest in receiving payment in order to protect its interest. However, all creditors have an opportunity to object to the confirmation of a plan, so there are situations where the payment structure may be different. Say, for example, a mortgage creditor objects to being paid later on in the plan (ie. 25 months into the case after the car is fully paid), then an amendment to the plan must be made to pay the mortgage company more. Still, normally, a mortgage company is considered to be “adequately protected” because a debtor who keeps his home in Chapter 13 continues to make post-petition mortgage payments.

Tax authorities, such as the IRS or the Georgia Department of Revenue, receive “priority” status for tax debt that is not dischargeable (tax debt that is more than three years old may be discharged under certain circumstances). Priority creditors are typically paid after secured claims have been paid.

Lessors, such as landlords or rent-to-own creditors, are not typically paid through a Chapter 13 plan. Normally, debtors pay their leases directly.

Finally, unsecured creditors are last in line for payment after secured and priority creditors are paid in Chapter 13 bankruptcy cases. Depending on the income and/or assets of a debtor, unsecured creditors receive 0% to 100% repayment in Chapter 13 cases. I often come across clients in my Atlanta bankruptcy practice who can benefit greatly from Chapter 13 bankruptcy where their income allows them to repay only a small percentage of their unsecured creditors while still allowing them to keep and repay their cars and homes.

If you have any questions regarding how your creditors will be paid in bankruptcy, please call us at 404.585.0040 to meet with a Georgia bankruptcy attorney.


Charles is absolutely a brilliant attorney! He is a critical thinker and determined problem solver. He is very accessible, even via text. If he is in court, his ability to multi-task, you can feel safe and secure in knowing he is handling any issues or concerns. I entrust him with my future, he is a uniquely talented attorney who always challenges himself to achieve the absolute best outcome for his clients.



I was very satisfied with Mr. Clapp services. He is a man of his word and did everything he told me he would. I would highly recommend him.



I came to Mr. Clapp by referral with a complicated case involving both personal and business debts that were out of control. Mr. Clapp evaluated the situation and gave me options that I was not even aware of. He knows his stuff, executed flawlessly, and I have been able to start over. I highly recommend Charles Clapp if you have debt or bankruptcy issues. Listen to his advice, he knows his stuff. I consulted with several other bankruptcy attorneys prior to retaining Mr. Clapp, and they did not have the same breadth of knowledge that Mr. Clapp brought to my case.



I selected Charles Clapp to handle my bankruptcy based on his already positive reviews and I am glad that I did! He was very accommodating to my schedule and made my negative life experience positive. I was actually very surprised how easy he made the process. Life happens and it’s great to be represented by someone that understand that!!! Stop your attorney search with Charles Clapp!!!