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LSDefine
Simple English definitions for legal terms
creditor's claim
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A quick definition of creditor's claim:
A creditor's claim is a document that a person or organization files with a court to show that someone owes them money. The document includes information about the debt and evidence to support it. Creditors must file a claim during bankruptcy or probate proceedings to have a chance of getting paid. If they don't file a claim, they may lose out on receiving any money. There are specific time limits for filing a claim, and only creditors who file within that time and prove their debt will receive any money. Sometimes, a creditor may not need to file a claim if they want to challenge the court's authority.
A more thorough explanation:
Creditor's claim, also known as proof of claim, is a legal document filed with a bankruptcy or probate court to establish a debt owed to an individual or organization. This document provides specific details about the debt, how it was incurred, and includes evidence of the debt. It is necessary for creditors to file a creditor's claim during bankruptcy or probate proceedings to ensure that they receive their share of the assets.
For example, if a person owes money to a credit card company and files for bankruptcy, the credit card company must file a creditor's claim to receive payment for the debt owed. If the credit card company fails to file a creditor's claim, they risk losing their share of the assets to other creditors.
State and federal laws provide specific timeframes for creditors to file a claim before the court closes the proceedings. If a creditor fails to file a claim within the appropriate time, they may not receive any payment for the debt owed.
It is important to note that there are situations where a creditor may not need to file a creditor's claim, such as if they wish to challenge the jurisdiction of the court.