Proof of Claim – How Creditors Get Paid in Bankruptcy

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Proof of Claim – How Creditors Get Paid in Bankruptcy

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Bankruptcy has been one of the best tools to get rid of debt. Many people across the country regularly benefit from it. However, a point of concern is that, are the creditors always in a loss when any person files for bankruptcy? If that would have been the case, say Dallas based bankruptcy law firm Recovery Law Group lawyers, objections would have been raised against the entire process. Creditors get paid during bankruptcy, be it Chapter 7 (liquidation of assets) or Chapter 13 (repayment plan). They are assured of payment if they prepare and file a proof of claim.

What is proof of claim?

When bankruptcy is filed by a debtor, they are expected to list all their creditors along with the debts in the papers filed. These papers are used to inform the creditors of the impending bankruptcy. Once the creditor receives notification of the debtor’s bankruptcy filing, they should file a formal written statement if they wish to receive a payment through the bankruptcy estate. This statement is known as proof of claim and it is sent to, not just the bankruptcy court but also to the debtor, bankruptcy trustee as well as any other concerned party. This is particularly important for unsecured creditors. Proof of claim can be submitted in both Chapter 13 and Chapter 7 bankruptcy Dallas cases. Secured creditors, however, are not required to file this document as their debts are secured by liens.

By when can proof of claim be filed?

Unsecured creditors can be government or non-government. Though the criterion does not depend on the bankruptcy chapter, it surely does on the origin of the creditor. Government creditors can submit their proof of claim documents within 180 days of the meeting of creditors; while non-government ones need to submit theirs in 90 days. An experienced attorney Dallas can ensure that the claim papers are in order and filed within the stipulated time period. You can call 888-297-6023 to fix an appointment with qualified lawyers to deal with this issue.