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

UPDATED: Mar 29, 2011

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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