When filing for bankruptcy, you are responsible for submitting a considerable amount of paperwork that identifies your creditors and the outstanding debt. However, your creditors must also file claims because the amount of debt may have changed due to fees and interest rates. It’s important to understand what a proof of claim is and whether or not you can object to it if it is incorrect. As such, the following blog explores what you should know about these matters, including the importance of working with an experienced Memphis, TN consumer bankruptcy lawyer to help protect your rights during this process.
What Is a Proof of Claim and Who Files It?
A proof of claim is a document that creditors seeking payment from a bankruptcy case must file to receive the funds they are entitled to during this process. While creditors always file claims during Chapter 13 due to the nature of the repayment plan, whether or not they file during Chapter 7 depends on whether or not any funds will be available to pay these claims. Typically, the trustee assigned to your case is responsible for informing creditors whether or not they should file a claim.
It’s important to understand that the secured creditors must file a claim even if they have a lien on the property. However, if the creditor does not file this claim, the funds you pay during your Chapter 13 case will not be distributed to them. As such, you can fall behind on payments, resulting in the creditor reclaiming the property. It’s imperative to understand that you have options if this occurs. Generally, you’ll find that the first option is to continue making payments on the property outside of the repayment plan. The other option is to file a claim on behalf of the creditor so it can be included in your monthly payments.
Can I Object to This Claim?
As the party filing for bankruptcy, it’s imperative to understand that you are an “interested party,” thus allowing you the right to file an objection to the claim. Generally, the trustee, the filer, or other creditors can object to a certain claim, as they all have a vested interest in the outcome of the case.
There are several reasons you may wish to object to the claim filed by a creditor. For example, if they claim the debt is secured when it is unsecured, you may want to dispute this claim. Additionally, if they have included additional fees and interest rates or cannot submit the necessary documentation to prove the debt or the amount, you may wish to file an objection. Finally, you may choose this option if you believe the debt is excessive.
If you are ready to file for bankruptcy, it’s imperative to understand that this process has many nuances and can be incredibly difficult to navigate. As such, it’s in your best interest to connect with an experienced bankruptcy attorney to help you navigate these overwhelming and difficult times. At the Arnold Law Firm, our team understands how overwhelming bankruptcy can be as a result of the different aspects of this process. That is why our firm will help guide you through this process to fight for the best possible outcome. Contact us today to learn how we can assist you with these matters.
