Bankruptcy 101: The Proof of Claim

Creditors in virtually every bankruptcy case must have some way of showing how much the debtor owes them for their particular debt. Often, debts are listed specifically on the debtor’s schedules of assets and liabilities. In some situations, however, the debtor may describe these amounts incorrectly or may not list them at all. In those circumstances, a creditor should file a “proof of claim” to correct or set out the amount that the debtor owes to that particular creditor.

Do Creditors Always Have to File a Proof of Claim?

As a rule, it is a good idea for creditors to file a proof of claim in every bankruptcy case. Submitting this documentation creates a presumption of the amount of debt owed to that particular creditor. That is, the proof of claim is considered valid unless someone contests it, such as the debtor or another creditor.

However, creditors are sometimes not required to file a proof of claim. Creditors are not obligated to submit a proof of claim if the debtor correctly listed the debt on their schedule. In addition, creditors are not required to file a proof of claim in a no-asset case. In those cases, the debtor does not have any assets or income to speak of that can be used to pay creditors. In those situations, because the creditors will not receive anything, there is no need to go through the extra effort of filing a proof of claim.

Filing a Proof of Claim

You should use a specific form provided by the bankruptcy court to create your proof of claim. You can find this form on nearly every bankruptcy court’s website in the United States. The proof of claim form will request the following information:

  • The name of the creditor
  • Contact details for the creditor
  • Whether the claim is considered secured or unsecured
  • The amount of the claim
  • How the debt was acquired or came about
  • Whether the debt is entitled to a priority based on bankruptcy law

While some of this information is likely in your records, it can be difficult to determine how the form should be completed if you do not understand some aspects of bankruptcy law. For example, you may not realize when your claim is secured or when you may have priority over another creditor. However, these are important considerations because secured creditors and those with priority will be paid before unsecured claims.

Challenging a Proof of Claim

As a debtor or another creditor, you can challenge a proof of claim if you believe it is not accurate. You can do this by objecting to the proof. Then, the creditor has a chance to respond, and the court will usually hold a hearing to determine whether the claim is valid and the amount of the claim.

This process can be complicated and based on complex aspects of bankruptcy law. If you are considering challenging a proof of claim, having an experienced bankruptcy attorney on your side to help is a good idea. Contact our firm for more information about filing proofs of claim for challenging a proof of claim.