Preferred Debt - Explained
What is Preferred Debt?
Written by J. Mance Gordon
Updated at April 19th, 2024
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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.
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