Subrogation Rights

The right of an insurer, guarantor or other surety, after paying a claim of a creditor for which the debtor was primarily liable, to “step into the shoes” of that creditor, including any security for the debt, and to collect from the debtor the amount paid. Subrogation rights are upheld, with some modification, under Section 509(a). But as provided at Section 507(d), a subrogee does not inherit the priority status of certain claims otherwise entitled to priority (such as priority wage claims under Section 507(a)(3), priority employee benefits claims under Section 507(a)(4), and priority tax claims under Section 507(a)(8)).

Bankruptcy Code §§ 502(e)(1)(C), 507(d), 509(a). See also Co-Debtor, Guarantor.

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