Some creditors may be paid through the bankruptcy, others are not so lucky.
Some creditors are secured against collateral, such as a car or house; while others are unsecured, such as a credit card or medical bill; others are priority claims such as taxes, child support or alimony.
If there are funds to distribute in a bankruptcy each creditor (listed in your bankruptcy) will receive a form they can fill out on-line or by paper. This form is referred to as a Proof of Claim and must be filed with the Bankruptcy Court on a registry of claims. You can obtain a copy of the registry from your attorney or the Bankruptcy Court.
New Rules: Creditors if you snooze – you lose. In other words, no proof of claim = no payout. There may be exception for secured creditors, but why gamble?
December 1, 2017 there were some new rules governing the filing of proof of claim forms. Bankruptcy Rule 3001 details the deadlines and requirements for filing a proof of claim. Bankruptcy Rule 3002 describes the requirements for filing a proof of claim or interest. Bankruptcy Rule 3002.1 explains the process for filing a claim secured by a claim or interest in the Debtor’s principal residence. Bankruptcy Rule 3007 explains the process for objecting to claims.
The Debtor may file a proof of claim for those important creditors who failed to do so (such as a taxing authority). Bankruptcy Rule 3004 – gives the option for the debtor or trustee to file a proof of claim upon the expiration of the deadline for the creditor to file the claim. This can be important if the debtor owes back taxes and the taxing authority has not filed a claim. Remember the trustee will pay based on the filed claims, not the debtor’s schedules of what they owe.
Obviously, there are many more rules governing claims or the effect of a claim, so it is important that the debtor discuss claims filed by their creditors, or not filed.
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Creditors can be lost and confused when a bankruptcy is filed. Never ignore the bankruptcy notice; you must take steps to protect your security, if possible. More importantly NEVER demand payment for a debt once you know about the bankruptcy. Don’t play games here because it can become VERY expensive to clean up.