Legal Definitions - proof of claim

A proof of claim is a formal document submitted by a creditor in a bankruptcy case. It is a written statement that outlines the basis and the specific amount of money or other obligation that the debtor owes to the creditor. By filing a proof of claim, a creditor officially notifies the bankruptcy court and all other parties involved that they intend to recover their debt from the debtor's available assets during the bankruptcy proceedings.

An informal proof of claim refers to any communication from a creditor that clearly expresses their demand for payment and their intention to hold the debtor's bankruptcy estate responsible for the debt, even if this communication does not fully comply with the specific format and requirements mandated by bankruptcy law for a formal proof of claim. While not fully compliant, an informal proof of claim filed within the deadline can sometimes protect a creditor's right to payment if their formal proof of claim is submitted late.

• Example 1: Credit Card Debt

  When Maria files for Chapter 7 bankruptcy, she lists "Horizon Bank" as a creditor because she owes them $7,500 on a credit card. To ensure they are considered for payment from Maria's non-exempt assets, Horizon Bank's legal department files a proof of claim with the bankruptcy court. This document details the $7,500 debt, provides the account number, and may include copies of recent statements or the original credit agreement as evidence. This formal filing ensures Horizon Bank's debt is acknowledged and potentially included in any distribution of funds.

• Example 2: Business Supplier Invoice

  A construction company, "BuildRight Inc.," files for Chapter 11 bankruptcy to reorganize its debts. "SteelBeam Suppliers," which recently delivered a large order of materials worth $50,000 to BuildRight Inc. on credit, needs to ensure this outstanding invoice is recognized. SteelBeam Suppliers files a proof of claim, attaching copies of the purchase order, the delivery receipt, and the unpaid invoice. This action formally establishes their claim against BuildRight Inc.'s bankruptcy estate, allowing them to participate in the reorganization plan and potentially recover a portion of the money owed.

• Example 3: Unpaid Utility Bill

  After "Green Valley Apartments" (a property management company) files for bankruptcy, the local utility provider, "City Power & Light," discovers that Green Valley Apartments owes $2,200 for electricity services provided to its properties before the bankruptcy filing. To recover this amount, City Power & Light submits a proof of claim to the bankruptcy court. The claim specifies the amount owed, the service dates, and references the account numbers, ensuring that City Power & Light's outstanding bill is formally recognized as a debt within the bankruptcy proceedings.