General Motors Corp and Chrysler LLC may have to be forced into bankruptcy by the US government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

US taxpayers currently take a backseat to prior creditors, including Citigroup Inc, JPMorgan Chase & Co and Goldman Sachs Group Inc, according to loan agreements posted on the US Treasury's website.

The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.