Proof of Claim Definition

A proof of claim is a form submitted by a creditor in order to receive money from a debtor who has filed for bankruptcy. The document provides notice of the claim to all other parties involved in the bankruptcy, including the court, the debtor, and other creditors.

As a general rule, all creditors, whether they have secured debts or not, must file a proof of claim in order to have a chance to recover all, or at least part, of the amount owed to them. Creditors could include suppliers who have sold equipment or other goods to the debtor or parties who have rendered a service and have not yet been paid.

Key points to remember

  • If a business or individual owing you money declares bankruptcy, you must show proof of claim to be reimbursed.
  • Most non-government creditors have 70 days from the date of filing for bankruptcy to submit the form.
  • The court’s acceptance of a proof of claim does not guarantee that you will be reimbursed; the trustee reimburses creditors according to the type of debt owed, with the funds available from the bankruptcy estate.

What is proof of claim?

When an individual or business files for bankruptcy, a clerk notifies the creditors listed in the filing. These include creditors who have sold the debtor’s property, loaned them money, rented property to them, or performed a service for which they were not paid. The bankruptcy court clerk will send these creditors a proof of claim form (Form 410) along with instructions on how to complete it. They also include the deadline for submitting the form, which for most bankruptcies is 70 days after the date of filing for bankruptcy. For public creditors, the deadline is 180 days.

By submitting the proof of claim, the creditor essentially puts the amount of his claim in a queue with other creditors. It is the job of the bankruptcy trustee to pay the valid debts with the debtor’s available funds, according to their priority status. Bankruptcies are handled in the federal court system, and creditors must file their claims in the district dealing with the debtor’s case. Creditors can obtain a copy of Form 410 from the United States courts website.

While some districts allow unofficial forms, they must closely resemble the official form. The request must be made in writing and clearly express the intention to make a claim against the bankruptcy estate. Ultimately, the decision whether or not to accept unofficial proof of claim is left to the discretion of the bankruptcy judge overseeing the case.

Typically, those to whom a party must file a Chapter 11, Chapter 12, or Chapter 13 bankruptcy claim, all of which involve a creditors repayment plan, must file a proof of claim in order to receive funds. You must also submit the form if the debtor files under Chapter 7, provided there are funds available for distribution. In Chapter 7 “no assets” cases proof of claim is not required, as there is no money to share.

Fill in the form

Form 410 is a three-page document that should normally be completed and signed by the creditor, their attorney, or an authorized attorney. The information you will need to provide includes:

  • The amount of the claim
  • The basis of the complaint
  • If the debt is secured by a lien
  • The last four digits of the debtor’s account, if applicable
  • Your address for notifications and potential payments

Along with the form, you should include copies of all documents to support your claim, such as purchase orders, promissory notes, invoices, account statements, mortgages, and contracts.

In addition to sending the form to the appropriate district court, creditors can also file electronically, either through the court’s website or through a third-party bankruptcy claims agent. If you want confirmation that the proof of claim has been filed, you can include a self-addressed envelope with a copy of the form in your mailing, or you can visit the Court’s Electronic Public Access System (PACER) for see the form filed online.

What if you don’t receive a form?

For a variety of reasons, a party that owes you money may be left behind. This means that you will not receive a notice from the clerk with the deadline for your proof of claim.

If you find out about bankruptcy through an unofficial source, you should contact the person or company that owes you money and ask for their bankruptcy file number. You can then call the clerk of the tribunal de grande instance who processes their file to verify the deposit and ask him for the time limit for proof of claim. You can either access the form online or ask the clerk to mail one to you.

Secured debts take priority for repayment over unsecured debts in bankruptcy proceedings.

Prioritize debts

Once you file a proof of claim, it is usually accepted by the court, unless the trustee, debtor or other “interested party”, i.e. having a financial interest in the case, opposes it. This can happen, for example, if the creditor has entered an incorrect amount or has falsely identified the amount as secured debt when there is no lien involved. If the proof of claim is accepted by the court, it does not mean that the full amount will be paid to the creditor. Depending on the funds available, the role of the trustee is to reimburse the creditors depending on the type of debt.

Secured debts, such as mortgages and car loans, have a special status. Even if the court were to discharge these debts, the lien holder has the legal right to confiscate the property and sell it. Unsecured debts are lower in the hierarchy, although so-called priority debts, including child support, alimony, and income taxes unpaid under three years, are paid before other unpaid debts. guarantees, such as utility bills and credit card balances. If the bankruptcy estate does not have enough funds to pay off all creditors, which is common, an unsecured creditor may receive pennies on the dollar or maybe nothing at all.

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