What Is The Difference Between A Debt And A Claim?

28 Jan What Is The Difference Between A Debt And A Claim?

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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Andy Miofsky holds the highest AV PREEMINENT rating from Martindale Hubbell Law Directory and a perfect 10.0 from AVVO. Andy is an Illinois consumer rights lawyer with offices in Granite City Illinois. Andy represents people with bankruptcy and student loan debt problems throughout the Southern District of Illinois since 1979.
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