Except in Chapter 11 cases, in which certain scheduled claims are "deemed filed" a creditor desiring to receive distributions in a bankruptcy case must timely file a proof of claim.
A proof of claim is a written statement that sets forth the creditor's claim. It must conform substantially to Official Form 10, which can be found in the Bankruptcy Rules. While completing the proof of claim form is not difficult, it must be done carefully to avoid mistakes that could give the trustee or the debtor grounds to defeat the claim. The creditor or the creditor's agent must sign the proof of claim. Copies of the documents evidencing the claim, and evidence of perfection of any security interest claimed, must be attached to the proof of claim.
A "claim" in bankruptcy is (a) a right to payment, whether or not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (b) a right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
The "bar date" establishes the date by which proofs of claim must be filed. The bar date is similar to a statute of limitations and must be strictly observed. Most claims must be filed within 90 days after the first date set for the meeting of creditors. In Chapter 11 cases, the court fixes the bar date for filing proofs of claim.
"Secured claims" include "liens," "security," "security agreements" and "secured claims." An allowed claim secured by a lien on property in which the estate has an interest, or that is subject to setoff, is a "secured claim" to the extent of the value of the creditor's interest in the estate's interest in the property, or the amount subject to setoff. A secured claim carries the right to "adequate protection" of collateral.
Secured creditors are not required to file proofs of claim. The secured creditor holding a pre-bankruptcy lien need not file a proof of claim to preserve its status as a secured creditor, and the lien will pass through the bankruptcy case unaffected regardless of whether the secured creditor files a proof of claim. When there is a pre-petition arrearage, the secured creditor may wish to file a proof of claim to establish its claim for treatment in a Chapter 11 or 13 plan. Similarly, where the claim is only partially secured, the creditor may wish to file a proof of claim to establish a claim for the unsecured portion of its debt.
Common Mistakes: - Failure to provide proof of debt. - Misuse of check boxes. - Failure to provide proof of perfection of security interest. - Improper claim of priority status. - Late Filed Claims. - Failure to indicate amended claim.
If a proof of claim is timely and properly filed, it is "deemed allowed" unless a party in interest objects. Claims scheduled as undisputed, fixed or liquidated in Chapters 9 and 11 are deemed allowed even if no proof of claim is filed.
Once filed, a proof of claim constitutes "prima facie evidence of the validity and amount of the claim". The party objecting to a properly filed proof of claim has the initial burden of presenting sufficient evidence to overcome the prima facie effect of the proof of claim.
Effect of Filing a Proof of Claim: 1. A proof of claim supersedes the claim as scheduled by the debtor. 2. A claim is "deemed allowed" unless and until an objection is filed. 3. Only creditors holding allowed claims are entitled to vote on the confirmation of a Chapter 11 plan. 4. A creditor must hold an allowed claim in order to receive a distribution under a Chapter 7, a Chapter 13, or a Chapter 11 bankruptcy case. A properly executed and filed proof of claim establishes a creditor's allowed claim, unless a party in interest objects.
A creditor is generally deemed to have submitted itself to the jurisdiction of the Bankruptcy Court for purposes of the claim and issues related to the treatment and payment of the claim. This may not be desirable in all circumstances. It may result in a waiver of the right to a jury trial.