What is a Proof of Claim in a Bankruptcy Case?

If you are filing for bankruptcy, or your business is filing for bankruptcy, it will be important to learn more about the materials that will comprise your bankruptcy case. While your West Palm Beach bankruptcy lawyer will be able to provide clarification and information along the way, it is always a good idea to have general knowledge about what to expect. One term that you are likely to hear in your bankruptcy case is the “proof of claim.” What is a proof of claim, and what role do proofs of claims play in bankruptcy cases in South Florida? Consider the following information.

Understanding the Proof of Claim 

Most bankruptcy cases — both individual and business bankruptcies alike — will involve a number of proof of claim documents, or proofs of claims. The Federal Rules of Bankruptcy Procedure Rule 3001 governs the proofs of claim. Simply put, it is the form that a creditor uses to tell the bankruptcy trustee and court what type of debt you owe them and how much you owe. The proof of claim form will clarify whether the creditor has priority status (versus nonpriority status), and whether the creditor has a claim on a secured versus unsecured debt. Submitting a proof of claim in a bankruptcy case is also what allows a creditor to be paid out of the bankruptcy estate or to be paid through regular payments made as part of a reorganization bankruptcy plan.

Creditors file proof of claim forms in both consumer bankruptcy cases and business bankruptcy cases. If you are filing an individual bankruptcy case, regardless of whether you are filing for a Chapter 7 liquidation bankruptcy or a Chapter 13 reorganization bankruptcy, your creditors will file proofs of claims.

How Proof of Claim Forms Impact a Debtor’s Bankruptcy Case 

The information the creditor puts in its proof of claim — including the amount you owe, as well as priority status and secured versus unsecured debt — may determine whether, and how much, you will ultimately need to repay the creditor.

The information contained in a proof of claim form is also something that you or your business will need to take into account in a reorganization bankruptcy. In a consumer or business reorganization bankruptcy, the repayment plan will need to ensure that priority creditors are repaid in full, as well as secured creditors. Depending on your individual or business financial circumstances, nonpriority creditors with unsecured debt claims may only need to be repaid a portion of what they are owed, or in some cases nothing at all, with remaining debt being eligible for discharge.

Contact West Palm Beach Bankruptcy Attorney for Assistance 

Bankruptcy cases for both individuals and businesses alike are extremely complex, and each involve a wide range of documents and legal processes. If you have any questions about proofs of claims, or what your or your business’s responsibilities are to creditors in your bankruptcy case, it is important to seek legal advice as soon as possible. One of the experienced West Palm Beach bankruptcy lawyers at Kelley, Kaplan & Eller is here to answer any questions you have and to assist you or your business with your bankruptcy filing. Whether you are planning to file for an individual bankruptcy under Chapter 7 or Chapter 13, or a business bankruptcy under Chapter 11 or Subchapter V, our firm can assist you. Contact us today for more information.

Sources:

law.cornell.edu/rules/frbp/rule_3001

law.cornell.edu/uscode/text/11