What Is A Proof of Claim–Does It Come Off a Cereal Box?

17 Mar What Is A Proof of Claim–Does It Come Off a Cereal Box?

A proof of claim is an official document filed by a creditor in your bankruptcy case demonstrating to the court that the creditor is entitled to payment. Filing a proof of claim in a bankruptcy case is critical if a creditor wants to be paid anything.

Typically, for most consumer debtors, proofs of claim are not filed in chapter 7 cases. In chapter 7 cases, a creditor gets paid money only if the trustee sells or liquidates property. Because mo st chapter 7 cases are no-asset cases, meaning there is no non-exempt property that the trustee wants to sell, creditors are instructed not to file proofs of claim. In fact, the official bankruptcy notice sent to creditors tell the creditors not to file a proof of claim until they are told otherwise.

In chapter 13 cases, proofs of claim are usually filed by creditors though a trustee or even the debtor can file a proof of claim (for reasons why the debtor would file a proof of claim, see here). The proof of claim will tell how much is owing to the creditor. If the claim is a secured debt, the additional documentation attached to the proof of claim form will show what type of collateral is claimed and if the security interest is correctly noted orperfected.

On some secured debts like homes, the proof of claim will set forth how much is claimed in past due payments or inarrears on the mortgage debt. This mortgage arrears is the amount that will be paid to the mortgage creditor through your chapter 13 plan. The attachment to the proof of claim will often set forth additional information detailing how the creditor arrives at this figure such as late fees, foreclosure fees or other types of charges made by the creditor.

For proofs of claim filed on secured debts, the official form will have a blank for the creditor to write in what they believe the value of the collateral is. This is also very useful information. If you are proposing to pay a secured claim through your plan, you can generally count on paying the value of the collateral through your plan plus interest at the district rate. While the creditor’s value is not definitive, it gives you an idea of what the creditor thinks of the collateral’s value.

Finally, if a creditor is scheduled on your bankruptcy schedules and does not file a proof of claim, the creditor will not share in any distribution from the chapter 13 plan. For most unsecured and dischargeable claims, this is no big deal because the debts will still be discharged. However, for some secured debts, it is very important to monitor the case to make sure that proofs of claim are filed when appropriate.

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Adrian Lapas, Esq.

I've been practicing bankruptcy law in North Carolina since 1993, and am certified as a specialist in consumer bankruptcy law by the North Carolina State Bar.
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