When you’ve made the decision to file for bankruptcy protection,
you must provide your attorney with a complete list of your creditors.
The forms that are filed with the bankruptcy court will contain a complete
summary of your income as well as all debts which are owed. Only when
you provide complete and accurate information will the court be able to
determine the depth of your financial issues and understand the necessity
for filing bankruptcy.
Under California laws, when you file Chapter 7 or Chapter 13 bankruptcy,
you have a specific set of
assets which are exempt from liquidation. This means your creditors cannot force you to sell assets to pay your
debts. However, if you have assets that may be sold or if you are filing
Chapter 13 bankruptcy, your
creditor must prove they have a legitimate claim that must be paid.
What is a proof of claim?
The bankruptcy court will typically advise your creditors that in order
for them to be paid they must file an official proof of claim known as a
Form 10. If you are filing a no-asset Chapter 7 (that is no assets are available
for liquidation) the court may advise them not to file a claim. However,
if you are filing Chapter 13, which involves restructuring your debt and
paying it back over time, your creditors must file these forms with the court.
What is included in a proof of claim?
Before a creditor can be repaid as part of your Chapter 13 bankruptcy plan,
they must provide the court with the following information:
- Debtor name and bankruptcy case number
- Creditor name and mailing address (original or amended claims)
- Amount debtor owes as of the date of the bankruptcy petition
- What the basis for the claim is
- Whether the debt is a secured debt (has an underlying asset) or unsecured
claim (such as medical bills)
These claim must also include substantiating documents proving you owe
the money, the amount is accurate and your payment history. Failure to
provide the proper documentation may result in the court excluding the claim.
In nearly all cases, the court will accept these claims as they are. However,
as a debtor, if you are filing Chapter 13, your attorney may dispute these
claims if any of the information contained in the claim is inaccurate
or if you believe the claim is filed only as a means of forcing you to
pay a bill.
Your creditors have certain rights if you are filing Chapter 13 bankruptcy
but you have rights as well. If a creditor has not provided the necessary
proof including substantiating documents showing you actually owe money,
they cannot simply depend on Form 10 to show that you actually owe money.
If you're considering filing bankruptcy in California,
contact Law Offices of James C. Shields. We will discuss all of your options with you and help ensure that creditors