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What Is a Proof of Claim in Bankruptcy?



A core part of any bankruptcy proceeding is the proof of claim. What is bankruptcy proof of claim and how does it work?

A bankruptcy proof of claim is a written statement depicting the amount and basis for a creditor's claim against the debtor. The proof of claim form is designated in the Federal Rules of Bankruptcy Procedure as Official Form 10.

Filing a Proof of Claim

The claim form and instructions are usually mailed to eligible creditors near the beginning of the bankruptcy case, if there are potential assets to distribute for the benefit of paying creditors' claims. Often, the proof of claim filing package accompanies the notice sent by the bankruptcy court to creditors and parties in interest alerting them to the filing of the bankruptcy petition by the debtor and commencement of the case.

Even though the form associated with filing a proof of claim is relatively simple, straightforward, and brief, the information covered in the form is technical. As such, the form must be completed entirely and filled out correctly in order to avoid objections and to best position the claimant to overcome objections.

The proof of claim is usually filed with the bankruptcy court in both Chapter 7 and 13 bankruptcy cases. In large Chapter 11 cases, proof of claim forms are often filed with professional claims management services. In jurisdictions where electronic case filing is used, proofs of claim and substantiating documents are filed electronically by the creditor or his counsel. Depending on the bankruptcy chapter filed and the party charged with administration of claims, either the trustee, claims management service, or debtor will review claims filed and lodge objections to claims deemed improper in type, amount, or otherwise.

Proof of Claim Requirements

A creditor must timely file a proof of claim to receive distributions from the bankruptcy estate in partial or full repayment of his claim. The initial instructions accompanying the claim form set forth claims bar dates for private parties and the government. The failure of a creditor to timely file her claim by the applicable bar date can be fatal to the creditor's eligibility to have a claim reviewed, and ultimately, to entitlement of the creditor to payment upon such claim. Claims bar dates are akin to statutes of limitation and are strictly enforced; the only exception exists when a creditor files for leave to file a late claim due to excusable and unusual circumstances.

Amendments

A creditor's proof of claim may be amended. Amendments occur to change items like the claim amount, to add additional supporting documentation, and to change classification of the claim. Claims are signed and dated by the filing party, and the signature is affixed under penalty of perjury, as is similarly required of all bankruptcy filings.

Given the details above, consumers facing bankruptcy can now be more informed when reviewing the proof of claim for their case. As with any complex legal issue, it is highly recommended that those facing bankruptcy consult with a qualified attorney.