What is Proof of Claim?

A proof of claim is a legally drafted statement submitted to a bankruptcy court, the trustee, the debtor, and other related parties informing them that the creditor has a right to receive a payout from the debtor’s estate.

In other words, it’s a document that creditors submit to ensure that they receive a part of the due payment from their debtor’s estate.

The proof of claim document is simply a legal document that needs to be filed in order for the request to be validated.

The filing of a proof of claim

With regard to bankruptcy cases 7 and 13, proof of claim must be filed by all creditors that are unsecured. It must be done in order for their claim to be permitted and considered. The same isn’t always true for secured creditors. For example, lien holders don’t have to file a proof of claim to protect their liens in such cases.

There is also a deadline for filing a proof of claim. In the case of Chapter 7 & 19 bankruptcy cases, this would be 90 days from the date on which the creditors had their first meeting. However, for government entities, the deadline is 180 days from the order of relief date.

The deadline is usually mentioned in the first notice to the creditors. The notice is meant to keep the creditors informed of the petition being filed and often mentions the date for the creditors’ meeting. Apart from all of this, the notice also mentions the last date on which objections against the discharge can be filed.

Bankruptcy courts do not extend deadlines. However, they do have the authority to extend the filing time, provided the creditors can prove excusable neglect or prove claimed "extenuating circumstances".

What does a proof of claim contain?

In a formal proof of claim, the creditor must include the debtor’s identity, the bankruptcy case number, the creditor’s own identity, and the mailing address for the receipt of notices. This information must be provided irrespective of whether or not the claim is an amended one or an original one.

Other than that, the proof of claim must mention why the claim is being made, the amount owed, and the type of claim i.e. secured or unsecured.

There need to be relevant documents attached to the proof of claim as well. This is mandatory for secured claims. Lastly, the creditor must validate the proof of claim with an authentic signature.

Creditors can file an informal proof of claim as well. However, there are 5 key requirements that need to be met for courts to accept such claims. Firstly, the claim must be in writing. Secondly, the claim must make a demand against the bankruptcy estate. Thirdly, the claim must hold the estate liable (intent must be clear). Then, the claim must be filed with the bankruptcy court. Finally, it must be considered fair by the court with regard to the circumstances of the particular case.