In a Chapter 7 bankruptcy liquidation, which of the following claims has the highest priority for distribution?

Answer options:

Employee wages earned within 180 days of filing (up to statutory limit).

Domestic support obligations (alimony and child support).

Administrative expenses of the bankruptcy estate.

Federal income tax claims.

How to approach this question

Mnemonic: 'SAG WEG CTI' (Support, Admin, Gap, Wages, Employee benefits, Grain/fishermen, Consumer deposits, Taxes, Injury). Support is #1.

Full Answer

B.Domestic support obligations (alimony and child support).✓ Correct

Under the Bankruptcy Code, Domestic Support Obligations (alimony, child support) have the first priority among unsecured claims. Administrative expenses are second.

Common mistakes

Thinking Admin expenses are #1 (they used to be, before 2005 BAPCPA changes).

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