What Is a Proof of Claim Form & What Does it Mean?

Federal bankruptcy courts often require creditors to file a proof of claim form.

If someone files for bankruptcy, a federal bankruptcy court will review the cash and other financial assets available to the person or business declaring bankruptcy and decide how the assets are to be distributed to creditors. If you are one of the bankruptcy filer's creditors, you might be one of those eligible to receive funds. This usually involves some paperwork and may require filing a proof of claim form.

Types of Bankruptcies

All bankruptcies in the U.S. are filed in federal bankruptcy courts, as almost all cases involve financial transactions across state borders. The vast majority of bankruptcies are filed as Chapter 7 bankruptcies (complete liquidation), Chapter 11 (reorganization plans, chiefly for business) or Chapter 13 (personal bankruptcy with repayments to creditors).

Proof of Claim Forms

Many bankruptcy cases require creditors, the people or businesses owed money, to file a proof of claim form with the court to preserve the creditor's right to receive payments from the debtor's assets. Creditors are generally notified by the bankruptcy court that a bankruptcy is in progress and the creditor is among those listed as being owed money. The court will also identify whether a proof of claim form is required and, if so, how to file the form. Each court has its own procedures for notification and filing. In general, a proof of claim form is required for Chapter 7 or Chapter 13 cases but may not be required for Chapter 11 (business reorganization) cases.

Importance of Proof of Claim Forms

You must file a proof of claim form if required by the court to protect your financial interests. The proof of claim provides formal certification of the amount you are owed. It also establishes the basis of the claim -- that is, how the debt was incurred. If you fail to file a required proof of claim, you cannot collect any funds owed to you by the bankruptcy estate. You also use the proof of claim form to identify your claim as secured (backed by a tangible asset) or unsecured. The court uses this information to decide the priority of the claims it receives.

Proof of Claims and Privacy

A proof of claim form often requires detailed information. Since the form becomes part of a public court record, care must be taken to protect individual privacy. For example, provide only the last four digits of identification numbers, such as your Social Security number, and limit health-related information to avoid revealing potentially embarrassing personal information.

References

• U.S. Courts: Bankruptcy Basics
• U.S. Courts: Bankruptcy Forms
• Maryland State Bar Association: The Need to File Proof of Claims in a Bankruptcy Case

Resources

• American Bar Association: How to Complete a Proof of Claim