Proof of Claims in Bankruptcy

A proof of claim is a document filed in the bankruptcy court to register a debt for the trustee to pay if funds are available. The creditor will need to list the amount of money owed, to whom, and any priority status if relevant as of the date the bankruptcy was filed. If a creditor seeks to be paid, they must submit a proof of claim with the clerk at the United States Bankruptcy Court.

In most Chapter 7 bankruptcy cases, there won’t be any assets in the bankruptcy estate to distribute to the creditors. This is due to the amount of exemptions that the debtor is legally allowed. If there is any nonexempt property in the bankruptcy estate, it can be sold and the money distributed to pay debt of the creditors. This is when the proof of claim is used for the trustee to know who to pay.

Deadline for Filing Claims

The courts will usually set a deadline for the creditors to file the claims, so the trustee will know how the estate funds will be distributed. Typically, the proof of claim must be submitted within 70 days after the bankruptcy petition is filed with the court. Additional time will be allowed to government creditors. Unless the creditor can show extenuating circumstances, extensions are usually not permitted. If the trustee or the debtor disputes the claim, the bankruptcy court may set a hearing to resolve the dispute.

Reasons Claims are Rejected

When the bankruptcy trustee receives a proof of claim, they must notify the creditor if the estate will allow or object to the claim to proceed. Some reasons a claim may be rejected:
The amount of the claim is in dispute
The creditor is claiming a higher priority

When the debtor makes their monthly payments to the trustee, administrative fees involved in the bankruptcy will be processed first. Priority unsecured creditors will be paid next and then the non-priority unsecured creditors if anything is left from the estate. Proof of claim forms can be downloaded from the United States Court Website.

Contacting a Sacramento bankruptcy attorney can help you understand the claims being made against your estate and help give you financial relief from your debt.