CREDITORS! Why your Proof of Claim is so important
A proof of claim is an official document filed by a creditor in a bankruptcy case in order to assert a claim against the assets of the bankruptcy estate. It is essential for a creditor to file a claim in a bankruptcy case if that creditor wants to be paid anything. The claim tells the court how much the creditor is owed and the type of claim being asserted (priority, secured, or unsecured).
In a Chapter 7 case, however, most consumer debtors do not have many proofs of claim filed in their cases. This is because a creditor only gets paid if the Chapter 7 trustee sells property, which rarely occurs. Most Chapter 7 debtors have only assets that are covered by exemptions, and therefore not available to the trustee to sell.
In Chapter 13 filings, it is more common for creditors to file proofs of claim. If the creditor has a secured claim, the creditor must attach additional documentation 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 security interest being “perfected").
Additionally, claims filed on secured debts also require the creditor to set forth what they believe the collateral is worth. This is useful information because you typically pay the value of a secured claim plus interest under your Chapter 13 plan. Obviously the value set forth by the creditor in the claim is not definitive, but it at least lets you know what your lender believes it is worth.
What happens if a creditor fails to file a claim in your bankruptcy and they are listed on your schedules? Good news for the debtor! Any creditor who fails to file a proof of claim in a Chapter 13 case will not share 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.