Define Consideration for Claim Bankruptcy
If a debtor files for bankruptcy, he owes money to creditors. After he files the bankruptcy petition, the clerk of the bankruptcy court notifies his creditors. To try to obtain payment, the creditor must file a claim with the bankruptcy court.
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Chapter 7
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A debtor filing for Chapter 7 bankruptcy must provide a matrix or list of creditors, including their contact information. The bankruptcy court puts the creditors on notice that the debtor has filed for bankruptcy. At this time, the debtor's creditors must cease all collection efforts.
Proof of Claim
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A creditor may collect payment only through the bankruptcy process. To receive consideration for a claim, a creditor must file its proof of claim with the bankruptcy court within 90 days of the first meeting of creditors.
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Priority of Claims
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After the creditor has filed its proof of claim, the bankruptcy trustee will consider the claim. The trustee pays claims according to priority. According to U.S. Courts, "There are six classes of claims, and each class must be paid in full before the next lower class is paid anything." Therefore, if a creditor's claim is low on the list, that claim may not be considered until the higher classes have been paid.
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References
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