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Creditors' Rights Litigation in State and Federal Courts
Creditors' Claims in Bankruptcy
Proofs Of Claim
When a debtor files for bankruptcy, a creditor pursues its claim against the debtor in bankruptcy in part by filing a proof of claim.
- A proof of claim is an official document that the creditor files in order to preserve its claim and ultimately potentially get paid from the bankruptcy proceeding.
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- A proof of claim is a written statement setting forth a creditor’s claim.
If a proof of claim is based on a written document, the creditor generally submits that document along with the proof of claim. If a creditor’s claims include interest, fees, expenses, or other charges incurred before the commencement of the bankruptcy proceeding, an itemized statement of the interest, fees, expenses, or charges must be filed with the proof of claim.
If a security interest is claimed in the debtor’s property, a statement of the amount necessary to cure any default as of the date of the petition must be filed with the proof of claim. The filing of a proof of claim is an important part of the process when a creditor asserts a claim in bankruptcy.
Compromises With the Bankruptcy Trustee
When a dispute arises between a creditor and a bankruptcy estate over the validity of a creditor’s claim, the creditor and the bankruptcy trustee can often reach a compromise such that the creditor may obtain a recovery.
The purpose of such compromises is to allow the bankruptcy estate and creditors to avoid the expense and burdens associated with litigating sharply contested claims.
The bankruptcy court has great latitude in approving a compromise between the creditor and the bankruptcy trustee so long as the Court finds that the compromise is fair and equitable. Reaching a compromise with the bankruptcy trustee is one of the ways in which a creditor can obtain a recovery in bankruptcy.
Non-Dischargeability Proceedings
When a debtor files for bankruptcy, the debtor’s debt is typically ultimately discharged. A bankruptcy discharge is an official court order that releases a debtor from liability for certain types of debts at the end of the bankruptcy process.
However, a creditor may be able to have a debt exempted from a discharge.
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Potentially Non-Dischargeable Debts
Where a creditor can prove that an individual debtor’s debt was for money, property, services, or an extension, renewal, or refinancing of credit to the extent obtained by... false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition, the debtor’s debt to the creditor may be exempt from the bankruptcy discharge.
For another example, when a creditor can demonstrate that an individual debtor’s debt was for willful and malicious injury by the debtor to another entity or to the property of another entity, the debtor’s debt may be exempted from a bankruptcy discharge.
Having a debt rendered non-dischargeable permits the creditor to continue to collect on the debt after the bankruptcy proceeding.
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Kluewer Law P.C.
Creditors' Claims in Bankruptcy
Los Angeles, California, San Francisco, California, Phoenix, Arizona
Kluewer Law P.C. has successfully obtained substantial recoveries for creditors in
bankruptcy proceedings.
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Kluewer Law P.C. has locations in Los Angeles, California, San Francisco, California, and
Phoenix, Arizona.
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