Preferred Debt - Explained
What is Preferred Debt?
Written by Jason Gordon
Updated at September 26th, 2021
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What is a Preferred Debt?
Preferred debt refers to a financial obligation (debt) that carries priority or preference over other debts. As such, preferred debts are paid before regular(or non-preferred) debts.
A preferred debt becomes important in instances of payor insolvency or bankruptcy. Preferred debts will be paid from estate of the debtor before regular debts are paid.
Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY
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