When a borrower or customer files for bankruptcy protection, it is important for creditors to file a Proof of Claim (POC). A POC is an official document filed in the debtor’s case to assert a claim against the assets of the bankruptcy estate. It is the creditor’s assertion that money is due and owing to the creditor. The claim also tells the court they type of claim being asserted (priority, secured, or unsecured).
You must examine the documents you receive from the bankruptcy court. In most Chapter 7 cases, few proof of claims are filed. This is because an unsecured creditor only gets paid if the Chapter 7 trustee sells property. Most Chapter 7 debtors have only assets that are covered by exemptions, and therefore not available to the trustee to sell. However, whenever in doubt, it is generally safer to file a claim.
It is more common for creditors to file proof of claims in Chapter 13 filings. Secured creditors must attach additional documentation to the claim form to show the type of collateral pledged and evidence that the security interest is valid, properly documented, and timely filed with the appropriate agency (otherwise known as the secuirty interest being “perfected”).
A secured creditor must also set forth what they believe the collateral is worth. This information is helpful because a Chapter 13 debtor typically pays the secured creditor the value of the claim, plus interest, under the Chapter 13 plan. The value claimed by the creditor is not definitive, but it provides the debtor with what the lender believes the claim is worth.
A creditor who fails to file a proof of claim in a Chapter 13 case runs the risk of not sharing in any distribution under the plan. If you hold an unsecured claim, this may not be a big deal because unsecured creditors typically are paid very little, if anything, under the plan. However, for most secured creditors, filing a claim is extremely important.
If you need assistance asserting your claims in bankruptcy cases, contact the attorneys at Windtberg & Zdancewicz, PLC, to discuss how we can help you.
The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation. We are experienced in creditor’s rights including garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance, or are interested in learning more, please contact us at (480) 584-5660.