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Preferred Debt - Explained

What is Preferred Debt?

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

What is a Preferred Debt?Academic Research

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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Academic Research on Preferred Debt



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