Proofs of Claims in Bankruptcy
Bankruptcies may seem quick and easy, especially Chapter 7 bankruptcy filings. However, there are still a lot of elements involved. Lots of forms are filed. One thing that you may see in your bankruptcy case is a proof of claim.
A proof of claim is a specific bankruptcy form that a creditor files in a bankruptcy case. It describes the amount of money the debtor owes the creditor. The creditor may be for a secured or unsecured debt. A creditor must file this document if they want to get paid.
Proofs of claims are not filed in every bankruptcy case. The creditor will receive a notice from the bankruptcy court instructing them to file a proof of claim by a certain deadline.
Creditors will always be allowed to file proofs of claims in Chapter 13 cases. The filing deadline is located on the Notice of Chapter 13 Filing (Form 309I), which all creditors receive when the debtor opens the bankruptcy case.
Claims can be objected to. An objection to a claim might arise if the trustee or the debtor believes that the amount of the debt is excessive, the creditor is improperly seeking interest or penalty fees, or the claim lacks supporting documentation.
In Chapter 7 cases, creditors will only file proofs of claims if the trustee discovers assets that may be liquidated. In this case, the trustee will send out a notice to the creditors instructing them to file proofs of claim and stating the deadline. If a Chapter 7 debtor has no assets, the trustee will notify creditors that they do not need to file a proof of claim. However, if the trustee later finds out that the debtor has assets, they will contact creditors later to let them know they can file a proof of claim.
Note that filing a proof of claim does not guarantee that a creditor will be paid at all. In Chapter 7 cases, the trustee will use the proofs of claims to make distributions to creditors based on the amount of money in the debtor’s estate. In Chapter 13 cases, the trustee and creditors may use the information in the proof of claim object to the repayment plan.
A secured creditor who fails to file a proof of claim still may have a lien on the asset attached to its debt. This is especially true in Chapter 13 bankruptcies. This means that a debtor will be able to keep that asset only if they stay current with their payments.
Consult a Bankruptcy Expert
Filing for bankruptcy is not necessarily a pleasant experience, but it helps to understand the process and be more prepared. Hopefully, with the right partner by your side, you will come out on the other end in a much better financial situation.
The Law Offices of Adam M. Freiman will help you understand all the procedures and guide you through the process with ease.
