Bankruptcy Basics: What is a Proof of Claim?

In bankruptcy law, a proof of claim ("POC") is a form completed by creditors and filed with the bankruptcy court. See sample POC form here. In bankruptcy law, a "claim" is a creditor's right to receive payment for a debt owed by the debtor on the date that a bankruptcy petition is filed. Thus, the form is called a "Proof of Claim."

Once a bankruptcy petition is filed, by law, creditors can no longer attempt to collect on a debt other than through the bankruptcy court. Thus, if creditors want any amount of payment on the debt, creditors must file a POC form. If monies are available to pay creditors, which is not always the case, then filing a POC form makes a creditor eligible to collect some amount of payment on the debt from the court through the bankruptcy proceeding. For example, if the debtor owes a certain amount of unpaid back rent to a landlord, the landlord must file a POC form to receive payment. POC forms must be filed by non-governmental creditors within 70 days from the date that the bankruptcy petition is filed (governmental creditors have 180 days to file their POC forms).

Various information must be provided by the creditor including the creditor's name and contact information, the amount of money that is claimed due and owing and more. The POC form must be filed with the same bankruptcy court where the bankruptcy petition is filed. This is true even if the creditor is located in a different state than the debtor. For example, if a debtor living in California has credit card debt owed to a creditor located in New York, the credit card company will have to file a POC form in the California bankruptcy court (not one in New York).

A POC is "allowed" unless there is an objection to the POC. Various parties can object to a POC including the debtor, other creditors and officers of the bankruptcy court -- namely, the trustee assigned to the case.

Secured vs. Unsecured Debt

To oversimplify a bit, in bankruptcies, there are two kinds of debt — secured and unsecured debt. A secured debt is one which is "secured" by a lien on some physical asset. A car loan, for example, is typically secured by a lien on the car. A lien gives the creditor a right to repossess the physical asset. An unsecured debt is one that is not secured by a lien on a physical asset. Generally speaking, creditors with secured assets almost always file POC forms. By contrast, depending on the type of bankruptcy, creditors with unsecured debts sometimes do not bother to file POC forms.

POC Forms and Different Types of Bankruptcies

Typically, if the debtor has filed a Chapter 11 or Chapter 13 bankruptcy, then all creditors will file POC forms. In these types of bankruptcies, it is expected that the monies will be available to pay some portion of the debts owed to the creditors. As noted, to be eligible for payment through the bankruptcy court, a creditor must file a POC form. However, with Chapter 7 bankruptcies, often, it is expected that NO monies will be available to pay creditors. Thus, in Chapter 7 bankruptcies, some creditors -- particularly creditors with unsecured debt -- do not bother to file POC forms. But, sometimes, if monies are unexpectedly located to pay creditors, the court will notify the creditors and allow additional time for the filing of POC forms.

Contact an Experienced Debt Relief and Debtors’ Rights Attorney

For more information, contact the Debtors’ Rights attorneys at Guardian Litigation Group. We can help if you think bankruptcy is the right option. We have the tools and experience you need. Our mission is to provide unparalleled legal services and support for those being crushed by their debts and harassed by their creditors. We can also help with debt settlement negotiations for an individual creditor or a group of creditors. We can be reached via our contact page or by phone at (800) 316-3133.