Filing of Claims by Creditors
When you file for bankruptcy, all of the creditors listed in your paperwork receive notice that you have filed, as well as a claims bar date for their filing of claims. Once they receive notice, they can no longer make any collections efforts. They must stop calling and sending letters, and they must stop any legal proceedings that are underway to collect the debt. In general, the law favors creditors getting repaid to the maximum extent possible before granting a discharge to an Alabama resident. An experienced bankruptcy attorney at Grainger Legal Services can look out for your best interests and help you through the complicated and challenging process of dealing with creditors'claims.Filing of Claims by Creditors
Once you file for bankruptcy, a bankruptcy estate is created. The estate temporarily becomes the owner of your property. In a Chapter 7 case, the bankruptcy trustee will liquidate the nonexempt assets in the estate so that the return to your unsecured creditors can be maximized. Creditors file what is called a "proof of claim" in order to prove they have a valid claim against your bankruptcy estate.
The proof of claim is a form that asks the creditor to provide the debtor's information, the creditor's information, the claim amount, information about the basis for the claim, and whether the debt is a priority claim, secured claim, or unsecured claim. The creditor has to attach any documents that substantiate the claim to the proof of claim form.
It must be filed by the claims bar date, which is usually 90 days after the initial meeting of creditors held about a month after you file for bankruptcy. When creditors fail to file their proofs of claim by the appropriate date, they cannot get paid through your bankruptcy. In most Chapter 7 cases, there simply are no nonexempt assets to distribute to creditors. However, in Chapter 13 bankruptcy and in some Chapter 7 bankruptcy cases, there are nonexempt assets, and the bankruptcy trustee will take care to pay those creditors that have filed a proof of claim, to the extent possible.
In some cases, you may want to file a proof of claim on behalf of a creditor that fails to file because you want to pay that creditor during the bankruptcy. This is usually applicable to secured creditors, such as a mortgage lender. However, there are also cases where you may not agree with the creditor's proof of claim. In that case, you have the opportunity to object. Typically, your attorney will need to fill out forms, get a hearing date, and explain why you disagree with the proof of claim. Some common reasons people object are because the claim amount is incorrect or the claim is improperly classified as a priority or secured debt instead of an unsecured debt.Consult a South-Central Alabama Attorney When Reorganizing Your Finances
Bankruptcy can be very helpful for people suffering from creditor harassment and collections efforts. The law is designed to make sure creditors are paid back to the extent possible before you receiving a discharge. Most creditors file claims to get the maximum return on their loan or other credit. Having a knowledgeable attorney can be critical to protecting your rights. At Grainger Legal Services, our bankruptcy lawyers can assist individuals in South-Central Alabama from our offices in Montgomery, Prattville, and Troy. Call us at (334) 260-0500 or contact us online to schedule a free consultation.