Schedule E, formally called Schedule E - Creditors Holding Unsecured Priority Claims, can be confusing and complicated for many debtors to complete. This is because, even with the instructions on the schedule, it can be confusing to determine what is considered to be a priority claim. Priority claims are either non-dischargeable in bankruptcy or are entitled to payment above other creditors if the bankruptcy trustee comes into assets.
Types of Priority Claims
The first sheet of the Schedule E acts as a road map for you to fill out the document. There are multiple boxes for you to check next to the type of priority claims that you have. If you have no priority claims, check the box for none. The types of priority claims include: domestic support obligations, extensions of credit in an involuntary bankruptcy case, wages/salaries/commissions, contributions to employee benefit plans, claims of certain farmers and fishermen, deposits by individuals, taxes and debt owed to governments, commitments to maintain capital of an insured depository institution, and claims for death or injury while the debtor was intoxicated. Schedule E contains a description for each category.
Column One - Creditor
In the first column, list the priority creditor's name, address, and your account number.
Column Two - Codebtor
Place an "X" in this box if the priority debt has a codebtor. For example, if you owe taxes along with your business partner, you would check this box for the tax debt.
Column Two - Type of Codebtor
In this column, write H, W, C, or J, for husband, wife, community or joint, respectively. This indicates your relationship with the codebtor. Community would only be indicated if you incurred the debt while married, and in a state that has community property laws.
Column Three - Date and Consideration
When was the claim incurred? Write down the date in this column. You must also indicate what you exchanged for the debt, also known as consideration.
Column Four to Six - Type of Debt
Are you disputing the debt, or claiming that it is contingent or unliquidated? Check one or more columns to indicate this. Unliquidated claims are those that cannot be calculated numerically. A contingent claim is one that has not arisen yet, but is contingent on some future event.
Column Seven - Amount of Claim
This column is fairly straightforward - you need only disclose the amount of the claim in dollars.
Column Eight - Amount Entitled to Priority
State in this column how much of each claim is entitled to priority. A claim is entitled to priority if it falls into one of the categories on the first page of the Schedule E. However, if you review these categories, certain debts are entitled to priority only up to a certain amount, such as claims of farmers and fishermen, which are limited in priority to $5,775 per individual.
Column Nine - Amount not Entitled to Priority
This column may have zero if the claim is completely priority. However, if, as described previously, the claim is in excess of the amount entitled to priority, list that amount here.
At the bottom of the Schedule E, you must total the amount of the priority claims, including a subtotal on each page of the Schedule E, if you need to use multiple pages.
Consequences of Priority Unsecured Claims
Priority unsecured claims will be paid above any other claims, except for administrative claims (such as the trustee's fees). This aspect does not particularly affect a debtor, but does certainly change the outcome of a distribution for other creditors. As previously discussed, however, many of the priority claims are also non-dischargeable, such as domestic support obligations, taxes, and claims for death or injury while intoxicated. This means that despite the bankruptcy filing, those creditors can still seek to collect the debt by suing you or by using any other legal means. This must be taken into account when you decide whether it is appropriate for you to file for bankruptcy.Having difficulty understanding the bankruptcy schedules? Post in the About Bankruptcy Forums!