How can you tell if a claim is secured or unsecured claim?

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How can you tell if a claim is secured or unsecured claim?

I have a couple of questions regarding the filing of a proof of claim. The situation is this. My wife and I were members of a flying/travel club out of MI that has filed for bankruptcy. We paid our dues of $600 and we paid a deposit of $2900 for a trip that has been cancelled. The amount of our claim is $3570. Can I send in cancelled checks as proof? Is this a priority claim?

Asked on March 29, 2011 under Bankruptcy Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

First, is this a secured claim? Almost certainly not, except in the very unlikely case that you were given a security interest in some asset of the company. Secured claims have property acting as collateral--e.g. a home mortgage, where the home can be foreclosed on; or a car loan, where the car can be repossed. For a secured claim to exist, you must specifically have been given, by some written instrument, a security interest in some defined property or asset of the club. Your claim, based on simply someone money, is almost certainly an unsecured claim.

Second, is it a priority claim? Unfortunately not. Priority claims--which are the first unsecured to be paid--are defined by alw and your claim does not seem to fall into the categories, which (in order) are alimony and child support; administrative expenses of the bankruptcy case; debts incurred after involuntary bankruptcy; employee wages; contributions to employee benefit plans; consumer layaway (e.g. buying furniture on layaway) deposits; taxes; and claims for death or personal injury from DUI/DWI. If your claim is not one of these, it's not priority.


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