Despite the fact that a large majority of Americans are in some sort of debt, many are hesitant to discuss debt as it is considered a taboo topic. As such, many go into bankruptcy unsure of what to expect and the many nuances involved in the process. One thing you may not be familiar with before embarking on this journey is the proof of claim process. The following blog explores what you should know about these matters, including the importance of working with an experienced Newburgh bankruptcy lawyer to explore your legal options.
What Is a Proof of Claim, and Who Files?
When you file for bankruptcy, you are essentially declaring that you cannot pay your debts. As such, you’ll need to choose which chapter to file. In simple terms, Chapter 7 involves liquidating your non-secured assets to repay creditors as much as possible before dismissing the remaining eligible debt, while Chapter 13 requires you to follow a three to five-year monthly repayment plan before discharging the remainder.
In order to obtain payments during this process, creditors must file a proof of claim. This essentially validates the debt owed and ensures that they are included in the distribution of payments. Additionally, it can help provide clarity as they may have a different debt amount in their records due to interest and fees.
However, you’ll find that if the creditor does not file the claim, the payments you make during Chapter 13 will not go toward the outstanding amount, leaving you vulnerable to having secured property repossessed due to the lien in place. As such, you may choose to file the proof of claim yourself on behalf of the creditor. If you do not file a proof of claim to ensure the debt is included in the payment distributions, you may choose to continue paying outside of bankruptcy to ensure you can keep the secured property.
Can I Contest the Filing?
In the event a creditor files a proof of claim for your property, any interested party in your bankruptcy case, including yourself as the filer, the trustee, or other creditors, can contest a claim. Generally, objections to the proof revolve around the amount of debt or the validity of the claim. For example, you may have documentation showing the amount the creditor listed on the claim is significantly lower than they claim. Similarly, if they do not have the proper documentation to substantiate the debt, you can dispute its inclusion in your payments.
When you wish to file for bankruptcy, it is critical to do so under the guidance of an experienced attorney, as they can help guide you through this process while protecting your rights. Unfortunately, without the help of an attorney, you may not know whether or not to file a claim or make payments on secured property, which can lead to it being repossessed. Additionally, your attorney can review the proof of claims filed by creditors to ensure they are accurate and help you contest them if they are not.
At the Law Offices of Michael D. Pinsky, P.C., we understand how overwhelming these matters can be to navigate on your own. That is why our firm is committed to helping you during these difficult times. When you need assistance, contact us today to discuss your circumstances in further detail.
