If an individual decides to declare bankruptcy, that person’s creditors may be asked to file proofs of claim. A proof of claim document will indicate how much a creditor is owed as well as whether the debt is secured or unsecured. Creditors will also need to confirm their address as well as the name of the debtor in question. Finally, a Florida entity will need to include proof that it is owed money from the person who is seeking bankruptcy protection.
The deadline for submitting a proof of claim depends on the type of protection a debtor seeks. In a Chapter 13 case, this document must typically be filed within 90 days of the initial creditor meeting. In a Chapter 7 case, the trustee will determine the deadline after first establishing that a debtor has assets that can be liquidated.
It is important to note that a creditor is not guaranteed to receive anything in a Chapter 7 or 13 proceeding. The amount a person or entity gets depends on how much money a debtor has as well as whether a debt is priority, secured or unsecured. Typically, priority debts such as past due child support or back taxes are paid first while unsecured creditors are paid last. Creditors may sell their claims if other parties are interested in acquiring them.
In a Chapter 7 proceeding, debtors may have many types of unsecured debts discharged relatively quickly. An attorney may be able to inform a debtor about the potential benefits of filing such as obtaining an automatic stay of creditor contact. The automatic stay may postpone creditor lawsuits or other collection activities.