What is a Proof of Claim in Chapter 13 Bankruptcy?

Chapter 13, simply put, is a debt consolidation and reorganization plan that uses court oversight and Federal Law to provide protections and rights that may not be available in a typical debt management program.  The plan is specific to each person's individual situation and circumstances. This allows for flexibility in terms of proposed repayment terms and how monthly payments are derived and structured. To understand your options for filing Chapter 13, please call us for a free consultation.  We provide both phone or in-office consultations to evaluate your circumstances and provide qualified recommendations.  Call us at 866-261-8282 or schedule a time online at any of our seven Michigan locations in:  Detroit, Ann Arbor, Southfield, Flint, Dearborn, Lansing or Warren. What is a Proof of Claim? A Proof of claim is a form that is filed with the United States Bankruptcy Court by a creditor or interested party in order to affirm their right to receive payment during the administration of the Chapter 13 case.  The claim establishes the amount of debt that is owed at the time of the bankruptcy filing. The Proof of Claim is filed with the court and served to:

• Debtor and their attorney;
• The Trustee assigned to the case;
• Other interested parties.

All unsecured creditors must file a Proof of Claim to get paid.  Most secured creditors must file a proof of claim as well. Why is it Important?It is important for the creditor to file the Proof of Claim because:

• It is necessary in order for the creditor to receive payment under the Chapter 13 plan, otherwise the debt is legally discharged without payment at the completion of the program;
• The claim provides details of the debt and a breakdown of the amount owed.  This provides a legal means for interested parties, especially debtors' counsel, to formally object with the court if there are issues.

Who Files It? It is your creditor's responsibility to file the Proof of Claim.  They are provided notice by the court that they are an interested party and have a deadline of 6 months. Does it Affect My Rights?Yes, it is important for your attorney to review the claims as they are filed as well as amendments to ensure the debt amounts are correct.  Without an objection from an interested party, the court will typically accept the amount stated on the claim. Our firm routinely objects to erroneous Proofs of Claims to advocate for our clients.  Here are the most common reasons we file objections:

1. The amount of debt stated is incorrect;
2. The claims overstates or overcharges for interest or other penalty charges;
3. The creditor mis-catagorized the nature of their interest (i.e. secured, priority or unsecured);
4. Support documentation is either incorrect or is not included to verify the claim.

Any other interested parties can raise objections too.  All such objections must be:

• Submitted to the court in the form of a motion;
• Served (mailed) along with any hearing notices to the creditors, debtors, debtor's counsel and the court-appointed Trustee;

The benefit of the Chapter 13 protection is to provide a legal process to resolve disputes with a creditor.  Without this process, it can be extremely frustrating for individuals to get satisfactory and timely resolution with stubborn creditors. Have Additional Chapter 13 Questions? Our firm specializes in Chapter 7 and 13 debt resolution.  With over 50 years of combined legal experience, we are well qualified to answer you questions about the Chapter 13 process. We encourage you to explore all of your debt resolution options.  However we have found that Chapter 13 is one of the most comprehensive ways to deal with your debt under court protection with a short timeframe (36 - 60 months) to reap the many  benefits of the program which include:

• Improved credit;
• Debt eliminations for all unsecured debt obligations, such as credit cards, medical bills, personal loans, many second mortgages, etc.;
• You are brought current on all secured debt obligations.

Call us today at 866-261-8282 for a free consultation with a licensed Michigan attorney.  We offer phone or in-office consultations at any of our seven Michigan locations:  Detroit, Ann Arbor, Flint, Southfield, Dearborn, Lansing or Warren.