What Is The Difference Between A Debt And A Claim?
By Andy Miofsky, Illinois Bankruptcy Attorney on Jan 28, 2007 in General Bankruptcy Information, Illinois
A Debt is a legal the amount of money owed to the owner of the obligation, usually a Creditor. Debt predates the filing of a Bankruptcy case and remains in existence throughout and after a case. The Claim exists only in the context of the bankruptcy case. It is a manifestation of the amount of money a Creditor, now a Claimant, alleges is owed on a given debt. A Claim is important when non-exempt funds exist in the Bankruptcy Estate. Claims may be paid from such funds. Upon the successful completion of a case, the Court usually issues an Order or Notice of Discharge. While the Claim is administered within the Bankruptcy case, it is the Debt that becomes discharged after successful completion of a case. If the Court does not issue an Order or a Notice of Discharge, then the debt is not discharged and the legal obligation to pay the debt remains. Regardless, the Claim is without legal effect after bankruptcy.
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