Part of the process of filing for Bankruptcy relief is disclosing to the Court a list of the names and addresses of all your creditors. In addition the Court also requires that you disclose the amount that you owe to each creditor. However, your creditors have an opportunity to assert that they are owed a different amount.
Proofs of Claim
Proofs of Claim play the biggest role in Chapter 13 Bankruptcy cases. To understand how Proofs of Claim are involved in your bankruptcy case, you need to know a little about the procedures that take place after your case has been filed. Once you file, the Court uses the list of creditors you submitted with your petition and mails an official notice of bankruptcy filing to each of your creditors. This puts your creditors on notice that you’ve filed, and it also lets them know that if they want to participate in the bankruptcy and potentially have some or all of their debt repaid then they must file a Proof of Claim. The Proof of Claim itself is a short document that the creditor files with the Court asserting exactly how much they are owed and where that debt comes from. If there are any documents to support their assertion then the creditor must attach those as well. So if you are not sure exactly how much you owe a particular creditor, don’t worry. As long as you have disclosed their name and address to the Court, they will be required to submit proof of exactly how much they are owed before the Court will distribute any funds to them.
If the creditor has properly filled out their Proof of Claim, then the Court will use that information to determine how much that creditor should be repaid. Importantly, creditors are not paid anything by the Court unless they file a Proof of Claim. If you list a particular creditor on your Bankruptcy case and they never file a Proof of Claim, then the Court will not distribute any funds to that creditor and the debt you owe them is still discharged. They will not be able to come back later and try to bill you for that amount.
This is not to say that your creditors will automatically get paid whatever they claim. If you see a claim that you think is improper, you can ask your attorney to file an objection and the court will determine if it is to be paid. At Bond & Botes, our experienced attorneys know how to walk you through the Bankruptcy process. Each of our offices offers free initial consultations. If you or someone you know is having financial problems, please don’t hesitate to contact us and set up an appointment with our attorneys.