What Is a Proof of Claim in Bankruptcy?

A proof of claim is a crucial step for creditors in bankruptcy cases. It is the official process a creditor must use to recover funds. (FRBP 3001.) Learn who can file a proof of claim form, filing procedures, and how to object when a creditor's proof of claim form is inaccurate.

Who Must File a Proof of Claim Form

All creditors seeking payment out of bankruptcy funds must file a proof of claim. (11 U.S.C. § 501(a); FRBP 3002.) Early in the case, the bankruptcy trustee informs creditors whether there will be funds to pay claims. In Chapter 7, it's common for creditors to receive nothing. These cases are known as Chapter 7 "no-asset" cases. If the trustee finds assets or funds for creditors, the status will change, and the trustee will instruct creditors to file a proof of claim. Creditors always file claims in Chapter 13 cases.

• Creditor's primary role. Typically, the creditor files the official proof of claim form, which informs the bankruptcy trustee of the type of claim the creditor asserts and the amount the filer owes the creditor.
• Debtor's secondary role. However, a debtor can file a claim for a creditor who doesn't file on time. (FRBP 3004.)

Because debts don't all receive equal treatment, but rather are paid in a particular order, the bankruptcy trustee needs this information to determine the amount to pay the creditor.

Example 1. Suppose that Troy owes a bank $10,000 for a personal loan and files for bankruptcy. The bank would file a proof of claim to assert its right to that $10,000 payment from Troy's bankruptcy estate.

Example 2. A Chapter 7 trustee is assigned to a case that initially appears to have no assets, and creditors aren't asked to file claims. However, after the trustee later discovers an undisclosed bank account, the status changes, and creditors are instructed to file their proofs of claim.

Where to File the Proof of Claim

File your claims with the bankruptcy court, not the trustee.

Electronic vs. Paper Filing Options

Many courts accept electronic filing through the "Electronic Proof of Claim" (ePOC) system. This easy-to-use system enables creditors to electronically draft, file, amend, or withdraw proofs of claims, as well as upload supporting documents. Check with your bankruptcy court for availability.

Critical Filing Deadlines You Can't Miss

The deadline for filing a proof of claim form for nongovernmental creditors in Chapter 7, 12, or Chapter 13 bankruptcy cases is 70 days after the petition filing date. Government entities have additional time and must file a proof of claim within 180 days after the "order for relief" or bankruptcy filing date. (FRBP 3002(c).)

The first notice sent to creditors includes the deadline for filing proofs of claim. It informs creditors that a petition has been filed and indicates the date set for the creditors' meeting. This notice also sets the last date they can file objections to the discharge.

Consequences for Missing Deadlines

Although the court doesn't usually permit extensions once the deadline has passed, it has the power to extend the filing time if a creditor demonstrates extenuating circumstances.

How to Complete Official Form 410: Step-by-Step Guide

Start by gathering the information you'll need to complete the form, then proceed to the steps.

Form 410 Essential Checklist

Here's how to correctly complete a Proof of Claim form to avoid delays or denial of payment. You'll find a fillable, downloadable copy of Form 410 on the U.S. Courts bankruptcy page, along with other forms filed in bankruptcy.

1. Complete case information. You'll need the full name of the bankruptcy filer and the bankruptcy case number, exactly as shown on court notices.
2. Identify the creditor. Provide the creditor's name and complete mailing address for notices.
3. Provide the amount owed as of the petition date. Include the amount owed as of the bankruptcy filing date, including principal, interest, fees, and other charges. Attach an itemization for interest, fees, and charges.
4. Include the claim basis. Clearly describe why the debtor owes you money. For example, "goods sold," "loan," or "judgment."
5. Identify claim status and type. Specify if the claim is secured (backed by collateral like a car or house), unsecured priority (like some taxes, wages, or support), or general unsecured. For secured claims, list the property and its value that secures your claim and attach supporting documents.
6. Attach supporting documentation. Attach copies of contracts, agreements, annual statements, account ledgers, invoices, and security documents.
7. Sign the form. The creditor or authorized representative must sign and attest that the information is accurate to the best of their knowledge. (FRBP 3001(b).)

Supporting Documents Required for Bankruptcy Form Filings

Supporting documentation is not optional—without it, your claim can be rejected or objected to.

• Credit cards or loans. Cardholder agreement, payment history, charge-off statement, and account ledger.
• Mortgages or car loans. Promissory note, mortgage or security agreement, payment ledger, title or lien proof, and evidence of perfection (for a principal residence, attach the mortgage proof of claim attachment).
• Judgments. Court order and docket sheet.
• Goods or Services. Invoices, shipping receipts, and signed contracts.
• Priority claims. Statutes showing why your claim qualifies as priority (wages, taxes, domestic support).
• Interest, penalties, fees. Itemized calculation and legal basis for each item.

Tip. Redact all but the last four digits of SSNs and account numbers, and fully redact birthdates. If documentation is missing, explain why, but expect potential objections.

How to Identify Your Claim Type

Here are the definitions for secured, priority, and unsecured claims, along with examples.

• Secured claims. You can seize specific property if not paid. Examples include mortgages, car loans, and equipment loans.
• Priority unsecured claims. Special statutory protection. Examples include child support, recent wages, and certain taxes.
• General unsecured claims. No collateral or special protection. Examples include credit cards, medical bills, and personal loans.

Securing Your Claim: When Collateral Matters

Secured creditors have distinct requirements and protections in bankruptcy proceedings.

Claim filing in Chapter 13. In Chapter 13, a secured creditor, such as a mortgage lender or vehicle lender, must file a claim to receive payment from the bankruptcy estate (with a few exceptions).
Preservation of lien rights. However, failure to file doesn't deprive a secured creditor of its lien. The creditor could still recover the house if the debtor doesn't pay as agreed.

Learn about the different requirements for keeping a house in Chapter 7 and keeping a home in Chapter 13.

Cure Amount Calculations for Security Interest Claims

Cure amounts represent overdue payments a debtor must make to assume an executory contract or unexpired lease. (11 U.S.C. § 365.)

• Cure amounts. All prepetition monetary defaults must be included.
• Prompt cure and interest. Prompt cure is required, though courts interpret "prompt" differently. Postpetition interest and fees may be included if the creditor is oversecured. (11 U.S.C. § 506(b).)

Some points about valuation:

• secured claims are bifurcated into secured and unsecured portions based on collateral value (11 U.S.C. § 506(a))
• the "fair market value" standard applies at the time of plan confirmation, and
• although challengers bear the initial burden, secured creditors must ultimately prove the extent of their claim and the value of the collateral.

Both monetary and nonmonetary defaults must be cured for contract assumption. "Historical defaults" that can't be cured, such as missed deadlines where "time is of the essence," may render contracts unassumable.

Transferred Claims

The process for handling bankruptcy claims that are sold or assigned involves specific forms and procedures.

• Required forms for transfer. When bankruptcy claims are sold or assigned, Forms 210A and 210B must be filed to officially record the change in claimant.
• Original claimant's continued role. The original claimant typically continues to receive payment until the claim is officially transferred. The original claimant will have a limited period to object after receiving notice.

Understanding the Bankruptcy Estate and Payment Order

When bankruptcy is filed, a bankruptcy estate is created, which is managed by a trustee. (11 U.S.C. § 541.)

• Estate control. This estate is controlled by the Chapter 7 or 13 trustee, or by the debtor-in-possession in Chapter 11 cases. It includes almost everything the debtor owns as of the petition date, with specific exclusions such as trust property, ERISA-qualified retirement plans, and spendthrift trusts.
• Payment from property. Creditors are paid from "nonexempt property," or assets not protected by a bankruptcy exemption.

Exempt property remains part of the estate until exemption claims become final and ownership is returned to the debtor. Learn which bankruptcy chapter you should file if you want to keep your house.

How Are Creditors' Claims Paid from the Bankruptcy Estate?

The order of payment for creditor claims is critical in bankruptcy. Payment depends on whether a claim is classified as a priority claim or a nonpriority claim.

• Claim types. Priority claims must be paid in full before nonpriority unsecured claims receive any funds. Nonpriority claims share any remaining funds on a pro rata basis.
  Priority payment order. The "Absolute Priority Rule" dictates the specific order in which the trustee must pay these priority debts, including domestic support obligations, administrative expenses, and certain tax obligations. (11 USC § 507(a).)

The following is a list of priority debts in the order they must be paid:

• domestic support obligations (child support, alimony)
• administrative expenses under Section 503(b) and court fees
• claims under Section 502(f)
• wages, salaries, and commissions (up to statutory caps)
• employee benefit plan contributions
• grain producers and fishermen claims
• consumer deposits (up to statutory limits)
• certain tax obligations
• federal depository insurance commitments, and
• certain motor vehicle accident claims.

Example. Suppose the bankruptcy estate has $80,000 available to distribute to creditors after deducting sales costs and the trustee's fee. The two priority claims—a domestic support obligation totaling $20,000, and an administrative expense claim totaling $10,000—would be paid first. The remaining $50,000 would then be distributed among $200,000 in nonpriority unsecured claims on a pro rata basis as follows: A $75,000 medical bill would receive $18,750; a $50,000 personal loan would receive $12,500; a $50,000 credit card bill would receive $12,500; and a $25,000 personal guarantee would receive $6,250.

Administrative Expense Claims in the Bankruptcy Estate

Administrative expense claims hold a significant position in the payment hierarchy.

• Definition and purpose. Administrative expense claims are often among the first priority claims to be paid. These fees involve postpetition debts that are necessary to preserve the bankruptcy estate. (11 U.S.C. § 503(b)(1)(A).)
• Common expense examples. Examples of administrative expenses incurred after the bankruptcy filing include professional fees for attorneys, accountants, and other professionals; wages and salaries for needed services; utilities and operational expenses; the bankruptcy estate's tax obligations; and environmental cleanup costs from post-petition conduct.

Example. Suppose the trustee hires an accountant to manage the bankruptcy estate's finances after the petition date. The accountant's fees would be a priority administrative expense because it was necessary to preserve the estate and would be paid before nonpriority unsecured debts.

Tip. An administrative expense claim is reimbursed by filing an "Application for Payment of Administrative Expenses." It must have been incurred after the bankruptcy filing and meet the "actual and necessary" to preserve the estate standard.

Calculating Postpetition Interest When Debtor Owes Creditor

Postpetition interest calculations depend on whether the debtor is solvent and other factors. If a debtor is solvent, unsecured claimholders are entitled to "payment of interest at the legal rate from the date of filing the petition." (11 U.S.C. § 726(a)(5).) Courts differ on the applicable rate.

• Federal judgment rate. The current trend is for many circuits, including the Ninth Circuit, to apply a uniform federal judgment rate to all creditors to ensure equitable treatment.
• Contract rate. Some argue the "legal rate" should refer to contractual rates, particularly for solvent debtors who can honor their agreements.

For secured claims, oversecured creditors may receive postpetition interest, attorneys' fees, and other charges to the extent that the collateral value exceeds the claim amount. (11 U.S.C. § 506(b).) Unmatured interest is disallowed without a specific exception.

Best Practices and Common Mistakes When Filing a Proof of Claim

Take a look at the two lists below for a quick check regarding whether you're doing everything you should be when filing your proof of claim.

Best Practices

• File on time. Review the court-issued notice for the exact deadline and file your proof of claim as soon as possible, taking into account the time it takes for mail or electronic submissions to be processed.
• Assemble documentation. Gather all necessary paperwork before you begin. If documentation is missing, explain why—some courts may deny claims without it.
• Double-check claim details. Compare your claim's details with the debtor's schedules and the bankruptcy notice to ensure all information is accurate and consistent.
• Classify your claim carefully. Only check "priority" or "secured" if you're certain, and provide documentation for those statuses.
• Maintain copies. Keep a complete copy of everything filed, along with the proof of submission.
• Track your claim. After filing, monitor the claims register online (if the court provides access) to confirm the claim has been recorded.

Common Mistakes

• Filing after the deadline or "bar date" without a court-approved extension.
• Forgetting to attach supporting documents proving the amount owed or the basis for the claim.
• Claiming priority without explaining why or showing proof.
• Incorrect priority, unsecured, or secured classification.
• Failing to sign the claim form.
• Making calculation errors in the amount owed.

Example. Suppose a credit card company filed a claim on day 71 in a Chapter 7 case, missing the 70-day deadline. That fairly common mistake would lead to the creditor's claim being disallowed.

How to Object to a Proof of Claim

The court usually accepts the proof of claim and its stated amount unless the debtor, trustee, or another interested party objects. Some of the most common objections someone might make include that the claimant:

• filed late or in violation of the statute of limitations
• included improper interest or other penalty charges, or
• failed to include supporting documentation.

Objections to Claims Procedures

Objecting to a creditor's claim requires adherence to specific legal procedures.

• Filing and service requirements. The objecting party must file a written objection with the bankruptcy court and serve a copy, along with a notice of hearing, on the creditor, debtor, and trustee at least 30 days before the scheduled hearing. (11 U.S.C. § 502; FRBP 3007.)
• Content of the written objection. The written objection must clearly identify the claim by claimant, filing date, amount, and priority status; state the grounds for objection on the face of the document; and include specific warning language about the 20-day response period.
• Identifying parties in interest. Only a "party in interest" or a person or entity with a financial stake in the outcome of the claim. Typically, the trustee objects, but the debtor can also object if the claim negatively impacts their property, payments, or postbankruptcy obligations.

The objecting party must provide sufficient evidence to challenge the creditor's claim. If this evidence is presented, the burden of proof then shifts to the creditor to substantiate their claim.

Filing Checklist and Key Takeaways

Practical Filing Checklist

• Confirm the bar date and calendar internal deadlines.
• Collect and redact supporting documents; itemize prepetition interest, fees, and charges.
• Complete Form 410 accurately; include collateral and perfection evidence for secured claims.
• File electronically if available; retain confirmations; monitor the claims register for recording and any objections.

Key Takeaways for Success

• Priority claims are paid before general unsecured claims.
• Administrative expenses use separate applications, not Form 410.
• Include documentation to avoid objections and potential claim denial.
• Electronic filing is often available and possibly required.
• Check your claim status through the court's claims register.

Frequently Asked Questions About Proof of Claims in Bankruptcy

Here are some frequently asked questions and their answers.

What is a proof of claim in bankruptcy?

A proof of claim is a written statement on Official Form 410 that asserts a creditor's right to payment from the debtor's estate, accompanied by the required supporting documentation.

Why do I need to file a proof of claim?

All creditors seeking payment out of bankruptcy funds must file a proof of claim. If a lender fails to file a proof of claim, the trustee won't pay the creditor out of the bankruptcy estate or the available funds to pay creditors.

Who can file a proof of claim?

All creditors seeking payment out of bankruptcy funds must file a proof of claim. Debtors can also file a proof of claim on behalf of a creditor.

Can I file a proof of claim electronically?

Most courts allow electronic filing, and some offer an ePOC system that requires no login. Paper filings may still be accepted by mail or in person. Check local procedures.

Do I need to serve copies of an objection on other parties?

Yes, if you are objecting to a claim, you must serve a copy of the objection and notice of hearing on the creditor, debtor, and trustee.

What documents should I attach to my proof of claim?

The creditor should attach supporting documentation, such as redacted copies of agreements, notes, ledgers, invoices, judgments, and evidence of lien perfection. Provide an itemized statement of principal, interest, fees, and charges in individual cases and explain any missing documents.

How do I redact sensitive information from attachments?

A common way to redact information before filing is to cover the confidential information with black felt tip and copy the document again, ensuring that all the information is adequately covered.

What is a bar date?

The bar date is the deadline for filing proofs of claim. For nongovernmental creditors, it's 70 days after the petition filing date. For government entities, it's 180 days after the "order for relief" or bankruptcy filing date.

Can I file a late proof of claim?

The court generally doesn't permit extensions once the deadline has passed. However, it has the authority to extend the filing time if a creditor demonstrates that there are extenuating circumstances.

What is the difference between secured and unsecured claims?

If the debt is tied to a specific property that the creditor can repossess if you don't pay, it's a secured claim. Secured claims are backed by collateral, like a mortgage or car loan, while unsecured claims are not. Major credit card balances are typical examples of unsecured claims. Learn more about secured, unsecured, and priority claims.

Do I need to file a proof of claim in a Chapter 11 case?

The Chapter 11 process involves substantially different procedures, including negotiations and a creditors' vote on the final plan; however, the process in a Chapter 11, subchapter V small business case proceeds much like a Chapter 13 case. In either instance, consider consulting with a local bankruptcy lawyer.

What are subordination agreements?

Subordination agreements are contractual arrangements in which one creditor agrees that their payment rights will be subordinated to those of another creditor, and "are enforceable to the same extent that they would be enforceable under nonbankruptcy law." (11 U.S.C. § 510(a).)

Why do subordination agreements matter?

Subordination arrangements are significant because they can substantially alter the priority waterfall and affect creditor recovery.

Priority restructuring. Senior creditors receive payment before subordinated creditors, potentially receiving "double dividends" from both their own claims and the proceeds of subordinated debt.
Voting rights provisions. Some subordination agreements grant senior creditors the right to vote subordinated creditors' claims in Chapter 11 proceedings, effectively giving them dual voting power.

Example. Assume $600,000 in assets and $500,000 of senior debt, $500,000 of subordinated debt, and $500,000 of other debt. The senior creditor would receive $400,000—their $200,000 dividend plus the subordinated creditor's $200,000 dividend—leaving only $200,000 for other creditors.

Important note. While mathematically sound, the above example is oversimplified. In actual practice, calculations for subordination agreements are highly complex and should be done with the assistance of a knowledgeable bankruptcy attorney.

Should I hire an attorney to file my proof of claim?

You should hire an attorney if you aren't comfortable preparing and filing your proof of claim form, if an objection is filed, or if the case involves Chapter 11.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true—and we wholeheartedly encourage research and learning. You'll find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. Information needed to complete the official downloadable bankruptcy forms can be found on the U.S. Trustee Program webpage of the Department of Justice.

However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.