Bankruptcy Proof of Claim
If you're considering filing for personal bankruptcy protection, you've probably heard or seen lots of legal lingo about what happens in the bankruptcy process and what to expect from the court and your creditors.
One action that a creditor in a bankruptcy case may take is filing a proof of claim - essentially a request that they be paid for outstanding debts.
Bankruptcy's legal protections can provide shelter throughout the bankruptcy process. To learn about your legal rights under bankruptcy law, connect with a local attorney today - just use the free case review form below to get started.
The Proof of Claim in Bankruptcy Cases
A proof of claim is, essentially, a document filed by a bankruptcy filer's creditor indicating that the filer owes that creditor money.
After a creditor has filed a proof of claim, the bankruptcy trustee (who is a federally appointed individual charged with overseeing a bankruptcy case) lets the creditor know whether the bankruptcy estate plans to allow or reject the claim. A trustee might object to a filer's claim for some of the following reasons:
- The claim is not liquidated: This might happen if, for example, someone filed a claim for damages but that claim had not been ruled on by a court. Such a claim could be rejected because it has no legal foundation for legitimacy.
- The claim amount is disputed: This might happen if, for example, a filer paid for unsatisfactory goods or services and the filer and creditor had not been able to determine how much money was owed. In a case like this, the bankruptcy court may be able to settle the dispute and determine the appropriate dollar amount for the claim.
- The creditor claims a higher priority than is legally outlined: The bankruptcy court specifies what priority each type of creditor has in bankruptcy cases, and if a creditor files a claim in which it asserts for itself a higher priority than the law indicates (which would mean that it would be repaid sooner than other creditors), the bankruptcy trustee might deny the claim.
If a bankruptcy trustee rejects a creditor's proof of claim, the dispute may be settled within the bankruptcy court so that the debt might be resolved.
Will Your Creditors File a Proof of Claim?
A creditor only needs to file a proof of claim if his debt is unsecured – that is, if the debt is not connected to any property. Car lenders and mortgage lenders, for example, would not need to file proofs of claim because those loans are connected to specific property (the car and the house), which back up the claim.
Ask a Lawyer Your Questions about Filing for Bankruptcy
If you'd like to know more about how bankruptcy might work for your finances specifically, take advantage of this opportunity to speak with a bankruptcy lawyer practicing in your area today.