Bradley’s Bankruptcy Basics: How To File a Proof of Claim 101 | Bradley Arant Boult Cummings LLP
You just found out that a client has filed for bankruptcy, what do you do now? One of the first steps is to determine if you need to produce a proof of claim.
How will I be alerted to bankruptcy?
When a bankruptcy case is filed, the debtor is required to list all of his creditors in the petition. Subsequently, the bankruptcy court clerk will send all listed creditors a notice that the debtor has filed for bankruptcy (this is normally known as “official form 309”). Important additional information is included on the bankruptcy notice, including the date and time of the meeting of creditors under section 341, the deadline for filing an objection to discharge or discharge of the debtor of a particular debt and the deadline for filing a proof of claim. .
Please see our before The Basics of Bradley’s Bankruptcy posts for more information on what to do when you receive a bankruptcy notice, as well as a helpful creditors checklist of actions you might want to take.
What is proof of claim?
A proof of claim is an official bankruptcy form that is completed by a creditor to show the amount of debt a debtor owed the creditor on the date the debtor filed for bankruptcy. A proof of claim is a standard form that can be downloaded here. A blank Proof of Claim form may also be included in the notice of bankruptcy filing that you receive from the clerk of the court. A creditor must complete and submit a proof of claim to receive payment for the claim. Here is a fictitious example of a completed Proof of Claim form along with a list of corresponding footnotes to help further explain the form from the perspective of a typical debtor and creditor.
Who needs to file a proof of claim?
If you are a secured or unsecured creditor in a Chapter 11, 12 or 13 bankruptcy, you must file a proof of claim to receive payment during the bankruptcy case. Depending on your claim and the terms of the plan, you may never receive payment if you do not provide proof of claim. If you are a creditor in a Chapter 7 bankruptcy case, you generally will not file a proof of claim if it is a “no assets” case. However, you will need to file a proof of claim in a Chapter 7 case if the trustee finds any assets during the review period. If this happens, you will receive a notice from the trustee to file a proof of claim, and they will indicate the deadline by which the proof of claim must be filed.
What is the deadline for submitting a proof of claim?
Non-government creditors have 70 days from the date of filing for bankruptcy to file a proof of claim. The notice you receive advising you that a bankruptcy case has been filed will also include the deadline for filing a proof of claim (unless it is a case with no Chapter 7 assets. , as noted above).
What information does a proof of claim require?
- Name of debtor
- Bankruptcy file number
- Your contact details (including your postal address)
- Amount due on the date of the petition (date on which the bankruptcy file was filed)
- Why the money is due (loan, lease, services rendered, etc.)
- Type of debt (secured vs. unsecured); more information on this distinction as it applies in bankruptcy cases will be included in the next The Basics of Bradley’s Bankruptcy content
- Supporting documentation; a creditor must attach documents reflecting the debt owed to him (lease contract, contract, court judgment, etc.)
How do I submit my proof of claim?
The notice alerting you to the bankruptcy case will include information on how to submit your proof of claim. The proof of claim should be filed with the specific court in which the debtor’s bankruptcy case is pending, and it should reference the correct case number. A proof of claim is normally submitted in one of three ways (the notice will often dictate which method to use):
- Sent to court at the address on the notice (the notice must also indicate whether regular mail and / or overnight courier services are accepted)
- By electronic means via the Court’s website
- Electronically via a third party bankruptcy claims attorney
You do not need a lawyer to file a proof of claim. However, depending on the complexity of the request and / or the supporting documents, it may be advantageous to seek advice before submitting the file. For example, in a case of the eleventh circuit, In re JH Investment Services, Inc., the IRS filed proof of claim claiming that the entire $ 46 million claim was secured while the debtor’s assets securing the claim were valued at just $ 750,000. The IRS did not show on its proof of claim any deficit amount that was an unsecured claim, instead listing the entire $ 46 million as secured. As a result, the IRS did not receive any payment for its unsecured deficit claim. For proofs of claim that are not straightforward, that are secured by multiple assets, or that relate to large debts, it may be advisable to retain the services of a lawyer to ensure that the creditor maximizes his or her chances of collection.