How to Purchase Bankruptcy Claims
A claim in bankruptcy is a right to payment from the debtor. Holders of claims are known as creditors in bankruptcy. For example, a credit card company is the owner of a claim against a debtor who incurred debt on the company's credit card. If the debtor has any non-exempt property, it will be distributed to the creditors according to their claims. Certain creditors have priority in payment, such as creditors with secured liens. As a result, you may wish to purchase a claim that is likely to receive a distribution.
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Instructions
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Request that the creditor file a proof of claim with the bankruptcy court. The proof of claim is a form document that the creditor must fill out to describe the basis, description, and amount of its claim against the debtor.
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Negotiate the terms for the sale of the claim. Determine the price to be paid for the claim and any warranties that you wish the creditor to make regarding the claim. For example, you may request that the creditor warrant that its claim is valid and not satisfied.
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Draft a claim transfer agreement. The claim transfer agreement is similar to a contract for the purchase of any intangible good, such as stock. See an attorney for guidance as to legal terms that are necessary to protect you. The basis of the agreement is that the creditor will assign its claim to you in exchange for a certain amount of consideration, such as money or other property. Execute the agreement.
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File a notice of transfer of claim with the bankruptcy court. Serve the notice on all creditors in the case by mail. Many bankruptcy courts use local forms for the notice of transfer. The notice merely recites the facts of the transfer. Wait 21 days to determine if any party objects to the transfer. If 21 days pass after the filing of the notice and no objection is filed with the court, the claim transfer is final and governed by the terms of your claim transfer agreement.
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