General Unsecured Claim

A claim for which a creditor holds no collateral (or whose lien on the collateral is avoided under one of the avoidance sections of the Code) or does not enjoy any statutory priority (statutory priority claims include certain wage and tax claims and, post-BAPCA, certain claims for goods delivered shortly before the bankruptcy filing).

If there are funds available to pay general unsecured claims, these claims are paid in proportion to the amount of the claim relative to the total of all allowed general unsecured claims.

General unsecured status is, for the most part, a fate only slightly better than death, sometimes worse in that the creditor may incur expenses in the bankruptcy case for little or no return, thus “throwing good money after bad.”

See also Administrative Claim, Priority Claim, Reclamation Claim, Secured Claim.

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