How Can a Creditor Make a Claim in a Bankruptcy Case?

 Posted on July 15, 2022 in Debt Collection

Creditors have a variety of options for collecting debts owed to them by debtors. However, these efforts may become more difficult if a debtor files for bankruptcy. A debtor may be able to discharge certain types of debts by completing the bankruptcy process. However, assets seized during a Chapter 7 bankruptcy may be liquidated to repay some of the debts owed, or a debtor may make payments toward their debts through a Chapter 13 bankruptcy repayment plan. To ensure that they can receive repayment during the bankruptcy process, a creditor will need to demonstrate that they have a valid claim against the debtor.

Filing a Proof of Claim

Creditors can show that they are owed money by a debtor by submitting a proof of claim form. Depending on the type of claim, a creditor may be prioritized when receiving payments from the debtor during the bankruptcy process, or they may only be able to receive payments after higher-priority debts have been paid. To submit a proof of claim, a creditor must file Form 410 with the bankruptcy court where the case is being heard. This form will include the following information:

• The name of the current creditor, as well as any other names the creditor has used to contact or communicate with the debtor.
• Contact information for the creditor detailing where informational notices and monetary payments should be sent.
• Whether the current creditor has acquired the debt from another party.
• The last four digits of the debtor’s account number or another number or code used by the creditor to identify the debtor.
• The full amount of the claim. If the claim includes interest, fees, or other charges, the creditor must submit a statement itemizing these charges.
• The basis of the claim, including whether it is for purchases on credit, products or services provided to the debtor, monetary loans, or claims against a debtor on the basis of personal injury or wrongful death. Documents supporting the claim must be submitted, although information that is protected by the debtor’s right to privacy, such as medical information, may be redacted.
• Whether the claim is secured or unsecured. If the claim is secured by a lien, the creditor must specify the type of property, the value of the collateral, the amount of the claim that is secured, the amount that is needed to resolve a default, and the interest rate on the loan.
• Whether the claim is a priority claim. The creditor must specify whether a claim is entitled to priority consideration because it is a domestic support obligation, a deposit of up to $3,350 toward the purchase or lease of property for the debtor’s personal use, wages or salaries of up to $15,150 earned from the debtor within 180 days before the debtor filed for bankruptcy, contributions by the debtor toward an employee benefit plan, taxes owed by the debtor, or another applicable priority debt.

Creditors must file a proof of claim within 70 days after the date the debtor filed a petition for bankruptcy. Failure to file the proper form and provide the required information may result in the creditor not receiving payments during the bankruptcy process, and the creditor may also be required to pay reasonable attorney’s fees or other expenses incurred by the debtor due to these issues.

Contact Our Cook County Creditor Bankruptcy Claim Attorneys

At Dimand Walinski Law Offices, P.C., we provide representation for creditors during bankruptcy proceedings and other situations involving debt collection. We can ensure that all proof of claim forms are filed correctly, and we can advocate on behalf of creditors to make sure they receive as much of what is owed to them as possible. Contact our Chicago creditors’ rights in bankruptcy lawyers today at 312-704-0771 to learn more about our legal services.

Sources:

https://www.uscourts.gov/sites/default/files/form_b_410.pdf

https://www.law.cornell.edu/rules/frbp/rule_3002

https://www.investopedia.com/proof-of-claim-5189527