Tuesday, April 25, 2017

What Is A Proof Of Claim?

Bankruptcy is full of rules and legal terms that may make you hesitant to file a case. But once you have some basics down, it is easy to see that bankruptcy can be very helpful if you are not able to meet all of your obligations each month. The first term you need to know is the automatic stay. The automatic stay is your best friend in bankruptcy, because it is the part of your case that stops the collections calls and lawsuits, and keeps creditors from garnishing your wages after you file a case. The second most important term to know is the discharge. The discharge is the official entry in your case that your debts are no longer due. But there are other words and phrases you will hear throughout your case, and it is a good idea to know the meaning of certain things.

If you file a Chapter 13 case one phrase you will hear a lot about is a proof of claim. A proof of claim is filed by your lenders, and it tells the Court the following information about the debt you owe to a specific creditor:

         The balance.
         The past due amount.
         The interest rate.
         The normal payment amount.
In a Chapter 13 case a creditor is paid according to the terms of your Chapter 13 Plan, but they will first expect to be paid according to the proof of claim they file in your case. You do have the opportunity to challenge or object to their claim, and should do so if the figures are not accurate. It might not seem like a “sophisticated” lender would file a claim for the wrong amount, but it happens more than you might think. Claims from mortgage companies are especially difficult to decipher, and it is always a good idea to make the lender prove the amount they claim is the correct amount. After all, you want to pay what is due for things you are keeping (like your house), so you are not hounded by the lender after the case is completed. The Trustee assigned to your case will also want to make sure the proof of claim is accurate, because the Trustee is the one who will be disbursing money to your lenders. If the claim is not correct, the Trustee may not make proper payment.

If you have more questions about how creditors get paid in bankruptcy cases, contact us today at www.law-ri.com. We will help you get prepared for what comes after we file your case, and have multiple locations where we schedule appointments.

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