What If a Secured Creditor Does Not File or Claim a Chapter 13?
When a debtor files a petition for chapter 13 certain creditors are required to file a proof of claim so that they can participate in the payout distribution from the bankruptcy plan.
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Significance
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A secured creditor is not required to file a proof of claim to establish their claim because they have lien on the property. A debt is secured if collateral, such as an automobile or home, has been pledged as security for the loan.
Types
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Unsecured creditors must file a proof of claim to participate in the bankruptcy payout plan. They may or may not receive any distribution when the plan starts because creditors are paid based on priority. Secured creditors have a higher priority.
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Considerations
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If a debt is partially secured a creditor may want to file a proof of claim for the portion of the debt which is unsecured.
Features
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When a proof of claim is filed there should be some documentation to show that the debt is valid. Documentation can include a promissory note or contract.
Prevention/Solution
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According to Hg.org, a secured creditor should file a proof of claim if the debtor was in a past-due status prior to the filing of the bankruptcy petition.
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