What is Bankruptcy Proof of Claim?


Eduardo from Executive Café & Deli in Clearwater, Florida, asks What is a Proof of Claim in Bankruptcy?  A Proof of Claim is a written Statement that notifies the Bankruptcy Court, The Bankruptcy Trustee, and the Debtor, that the Creditor intends to be eligible to receive a Distribution of monies from the Bankruptcy Estate.  In a Chapter 7 Bankruptcy, the Distribution of monies is through the Sale and Liquidation of Assets that the Bankruptcy Debtor owns that exceed the amounts permitted by the State or Federal Bankruptcy Exemptions.  In a Chapter 13 Bankruptcy, the Distribution of monies is generally made through the Bankruptcy Debtor making monthly payments to Chapter 13 Bankruptcy Trustee.

Generally, a Creditor must file the Proof of Claim within 90 days after the first Meeting of Creditors (341 Hearing), or within 180 days after the Order of Relief, or generally the commencement of the Bankruptcy, if the Creditor is a Governmental Entity.

If the Creditor does not meet these deadlines, often referred to as the Claim Bar Date, then the Claim may be Disallowed in the Bankruptcy.  One exception to this Rule is if the Creditor can show Excusable Neglect.

Every Proof of Claim in Bankruptcy must contain the following elements:

  1. The Case Number and Name of the Debtor;
  2. The Name of the Creditor and Mailing Address for Receipt of Notices
  3. Amount owed by the Debtor on the Date of filing the Petition for Bankruptcy;
  4. The Nature of the Claim (for example, Purchases, Taxes, etc);
  5. The Type of Claim (for example, Secured, Unsecured, Priority, etc)

A Party in Interest, in a Chapter 7 or Chapter 13 Bankruptcy, may file an Objection to a Proof of Claim filed by a Creditor for a number of reasons.  A Party in Interest in a Chapter 7 Bankruptcy is generally the Chapter 7 Bankruptcy Trustee.  A Party in Interest in a Chapter 13 Bankruptcy may be the Chapter 13 Bankruptcy Trustee, the Bankruptcy Debtor, or even another Creditor.

The basis for Objections that may be filed by a Party in Interest include instances where there is no Documentations Attached support the basis for the Proof of Claim.  For example, a Creditor maintaining that it has a Secured Claim must attach Documents supporting that assertion, such as the Contract or Lien filed documenting the Secured Interest held by that Creditor.  Other common Objections may be that the Amount claimed by the Creditor is not correct or that the Interest or other Charges included in the Proof of Claim are Improper.