How Can a Proof of Claim Filed by a Creditor Affect a Bankruptcy Case?

 Posted on November 17, 2022 in Bankruptcy

During the bankruptcy process, there are a wide variety of documents that will need to be filed and requirements that will need to be met. All of these factors can easily become overwhelming, especially for those who are already struggling financially and seeking relief from their debts. That is why working with a bankruptcy lawyer can be crucial, and it will ensure that debtors will be able to address any issues that may arise during their case. One factor that can sometimes play a role in a bankruptcy case involves a "proof of claim" filed by a creditor.

What Is a Proof of Claim?

In a Chapter 7 or Chapter 13 bankruptcy case, a "proof of claim" is a written statement from a creditor that states the amount of the creditor's claim and explains why the creditor thinks the debtor owes this money. A standard form is usually used that will identify the creditor and also provide other important details, such as whether the debt has been acquired from someone else, whether the debt is secured by collateral, and whether it is considered a priority debt.

How Does Filing a Proof of Claim Affect My Bankruptcy Case?

Generally, a proof of claim will ensure that a creditor will become an official part of the bankruptcy case. Creditors will generally be required to file proofs of claim to ensure that they can receive partial payment for the debts that are owed. In a Chapter 13 bankruptcy case, creditors who have filed proofs of claim may receive some of the payments made through the debtor's repayment plan. In a Chapter 7 case where a debtor's assets are seized and liquidated, the proceeds may be distributed among creditors who have filed proofs of claim.

In some cases, a proof of claim may be used by a creditor to object to the discharge of certain debts. The U.S. Bankruptcy Code states that debts obtained through false pretenses or through other illegal means, such as fraud or embezzlement, are not dischargeable. Debts for luxury goods or services worth more than $500 that were purchased within 90 days before a debtor filed for bankruptcy are also nondischargeable, as are cash advances totaling more than $750 that were received within 70 days before filing for bankruptcy. Creditors who wish to object to the discharge of these types of debts will be required to file a proof of claim within the appropriate deadlines during a bankruptcy case.

Contact Our San Antonio Bankruptcy Lawyer

If you are thinking about filing for bankruptcy, it is important to understand the requirements you will need to meet during your case. It is important to list all of your debts to ensure that they can be discharged once your bankruptcy case is complete. You may also need to determine how to respond to proofs of claim filed by creditors, as well as any objections that could affect your ability to discharge different debts. If you have questions about how these issues may affect your specific situation, the Law Offices of Chance M. McGhee can help you determine the best approach to take during your case, and we will work with you to resolve any concerns that may affect your ability to receive the debt relief you need. Contact our Boerne bankruptcy attorney today at 210-342-3400 for a free consultation.

Sources:

https://www.law.cornell.edu/uscode/text/11/523#a_3

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