Here's my take. First off, if you give preferential treatment to your friends just before filing bankruptcy, some very interesting things can happen in bankruptcy court. Your friends that you try to save may in fact get dragged in deeper if you're not careful.
Getting in debt to friends isn't generally conducive to retaining that friendship.
Ok, so who do I pay first? My pecking order is based on what I personally think is fair and my own sense of right and wrong. First people I pay are employees. They have families that depend on that paycheck. I pay them in full even if I do have to hock something.
I divide up whatever is left with the vendors who have unsecured credit lines with me. They are out goods and services. I return what I can and pay what I can.
Last on my list is secured creditors, banks, etc. Why? They knew they were taking a risk and were compensated for that risk in the form of interest and points. And besides that, the line gets inverted as soon as it hits bankruptcy court with secured creditors being first in line to get their piece of the corpse.
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04-03-2004
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