A bankruptcy proof of claim is a formal document that allows a creditor to assert a right to payment in a bankruptcy case. It identifies how much is owed, the nature of the debt, and the basis for the claim, such as goods sold, services provided, or money loaned. The proof of claim helps the bankruptcy court determine how the debtor’s limited assets will be distributed among creditors. According to the U.S. Bankruptcy Court, it is an essential part of the process that ensures fairness and transparency in the allocation of funds.
Any creditor that believes it is owed money by the debtor should file a proof of claim. This includes secured, unsecured, and priority creditors. Filing a claim ensures that your company’s right to payment is recorded with the court and that you will be included if any funds become available for distribution.
Some creditors may decide not to file if the debt is minimal, the cost of pursuing it outweighs the recovery, or the debt is fully secured by collateral that will not be impacted by the bankruptcy. In certain cases, the debtor’s schedules may already list the claim accurately and without dispute, which can make filing unnecessary. However, we recommend filing a claim in nearly all situations to protect your rights and ensure your company has a seat at the table should assets later become available.
In Chapter 7 and Chapter 13 bankruptcies, a creditor must file a proof of claim to be eligible for payment. In Chapter 11, creditors generally must file unless the debtor has listed the debt correctly as undisputed and liquidated. According to the Cornell Law School Legal Information Institute (LII), failure to file before the bar date may result in the loss of your right to participate in distributions.
The U.S. Bankruptcy Court’s official form includes fields for various pieces of information such as creditor name and location, the amount of the claim, the basis of the claim, whether the claim is secured, if the claim is based on a lease, and whether the claim is subject to right of setoff.
The claim must specify the total amount owed as of the date the bankruptcy case was filed. This includes the principal balance and any accrued interest or fees. Creditors should describe the basis of the claim clearly, such as “goods sold,” “services rendered,” or “money loaned.”
Include the full balance owed, both secured amounts and unsecured amounts, on all projects or open accounts. Make sure the secured and unsecured amounts are identified properly. Be aware that mechanic’s liens, bond claims, UCCs and judgments may allow you to file a secured proof of claim, putting you in a better position to get paid.
Documentation is required to substantiate the claim. Attach invoices, contracts, statements, or any documents that prove the amount and nature of the debt. Additionally, if you are a secured creditor, you should include a copy of the mechanic’s lien, bond claim, or UCC filing.
The Official Form 410 Instructions published by the U.S. Bankruptcy Court emphasize that a claim may be disallowed if adequate supporting evidence is not provided.
“Attach redacted copies of any documents that show that the debt exists, a lien secures the debt, or both. Also attach redacted copies of any documents that show perfection of any security interest or any assignments or transfers of the debt. In addition to the documents, a summary may be added.”
If the claim is secured, creditors must describe the collateral and its estimated value. Include any mechanic’s lien or UCC filing that shows the creditor’s legal right to the collateral. This ensures the court recognizes the claim’s priority and secured position.
U.S. Bankruptcy Court defines a secured claim under 11 U.S.C. §506 (a): “A claim backed by a lien on particular property of the debtor. A claim is secured to the extent that a creditor has the right to be paid from the property before other creditors are paid. The amount of a secured claim usually cannot be more than the value of the particular property on which the creditor has a lien. Any amount owed to a creditor that is more than the value of the property normally may be an unsecured claim.”
Timing is one of the most important factors in the bankruptcy process.
The bankruptcy bar date is a deadline by which all creditors must file their proof of claims within the bankruptcy court. It is critical that the proof of claim is filed correctly and timely (don’t be late!), whether it’s secured or unsecured, to ensure creditors’ rights are preserved and to maximize any possible distribution.
The bar date can be found within the bankruptcy notice or, if it’s set later, within the docket report of the bankruptcy.
The court will send a notification on the bar date to all creditors that are listed in its original petition, and the proof of claim must be filed in the same court in which the bankruptcy case was filed.
Filing a proof of claim allows creditors to formally state what they are owed in a bankruptcy case. The process begins with the required form and supporting documentation.
The Official Form 410 is the standard document used by all bankruptcy courts. It collects basic information about the creditor, the amount owed, the type of claim, and any secured interests. The form can be completed online or by hand, depending on the court’s procedures.
A creditor may file all claims against the same debtor on one Proof of Claim (Form 410), including secured, unsecured, and administrative priority portions. Filing multiple claim types can be tricky, fortunately NCS Credit’s specialists can manage the claim filing for you.
A lawyer is not required to file a proof of claim, but legal or professional assistance can be helpful, particularly for complex or high-value claims. Many creditors choose to work with trusted partners like NCS Credit to prepare and file proofs of claim. This ensures the claim is accurate, properly documented, and filed on time.
Creditors may submit claims by mailing the completed Form 410 and supporting documents to the address listed on the bankruptcy notice. The form must arrive by the bar date to be considered timely. Keep copies of all documents and proof of mailing for your records.
Most bankruptcy courts accept or require electronic filing. Each court provides specific instructions on its website.
There are two primary electronic filing systems:
Before filing, review the court’s requirements to determine which system applies to your case.
Chapter 13 Bankruptcy Proof of Claim
In Chapter 13 cases, debtors create a repayment plan supervised by a trustee. Creditors must file a proof of claim to receive payments through that plan. The trustee relies on these claims to determine how funds are distributed to each creditor.
In Chapter 7, the debtor’s non-exempt assets are liquidated to pay creditors. Only those who have filed a timely proof of claim are eligible for payment. If the trustee reports there are no assets available for distribution, creditors may be notified that filing a claim is unnecessary unless assets are later discovered.
In Chapter 11, businesses reorganize and continue operating under a court-approved plan. Creditors must file a proof of claim to ensure they are included in the reorganization and receive payment as outlined in the plan.
Chapter 11 claims are typically filed through the court’s electronic system or through a designated claims agent. The bankruptcy notice will specify the proper filing method and location. Supporting documentation should always be included to substantiate the claim.
After filing, the claim is reviewed by the debtor, trustee, or claims agent. The claim may be accepted, objected to, or clarified. If there are no objections, the claim is “allowed,” meaning it will be paid based on the type of bankruptcy and the availability of funds.
Creditors can monitor the progress of the case through the court’s docket or the PACER system. Staying informed helps ensure you know when distributions occur or if any issues arise regarding your claim.
Accuracy matters when filing a proof of claim. Even small errors or missing details can affect how and whether your claim is accepted.
Errors or incomplete information can delay the claims process or result in denial of payment. The court may require amendments or reject the claim altogether, which can reduce or eliminate recovery.
Failing to file on time or filing incorrectly can waive a creditor’s right to payment. The Cornell Law School LII notes that an untimely or incomplete claim may be subordinated or disallowed entirely. Accuracy, documentation, and prompt filing are key to protecting your company’s financial interests.
Filing a bankruptcy proof of claim can be complex, especially when deadlines are strict and documentation requirements vary by case. NCS Credit can help you protect your company’s rights by managing the process from start to finish.
Our team reviews your supporting documentation, prepares and files your proof of claim with the bankruptcy court, and monitors the case through resolution. We communicate directly with trustees or court representatives when necessary and provide timely updates throughout the process.
With decades of experience supporting creditors across industries, NCS Credit helps ensure your claim is filed correctly and on time, giving you confidence that your interests are protected.