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Daniel has 10+ years of experience reporting on investments and personal finance for outlets like AARP Bulletin and Exceptional magazine, in addition to being a column writer for Fatherly.
Updated January 12, 2023
A proof of claim is a form submitted by a creditor in order to receive money from a debtor who has filed for bankruptcy. The document provides notice of the claim to all of the other relevant parties involved in the bankruptcy, including the court, the debtor, and any other creditors.
Typically, all creditors, whether they are owed secured or unsecured debts, should file a proof of claim in order to have a chance for recouping all or at least some of the amount they are due. Creditors could include suppliers that have sold equipment or other goods to the debtor or parties that have performed a service and have yet to be paid.
When an individual or a business files for bankruptcy, a court clerk notifies any creditors listed in the filing. These include creditors that have sold the debtor goods, lent them money, rented property to them, or performed a service for which they have not been paid. The bankruptcy court clerk will send these creditors a proof of claim form (Form 410) as well as instructions for how to fill it out. They also include the deadline for submitting the form, which for most bankruptcies is 70 days after the bankruptcy filing date. For government creditors, the deadline is 180 days.
By submitting the proof of claim, the creditor is essentially putting their receivable amount in a queue with other creditors. It’s the job of the bankruptcy trustee to pay valid claims with the debtor’s available funds, based on their priority status. Bankruptcies are handled in the federal court system, and creditors should file their claim in the district handling the debtor’s case. Creditors can obtain a copy of Form 410 on the United States Courts website.
Though some districts allow unofficial forms, they have to closely resemble the official one. The request must be in writing and clearly articulate the intent to make a claim against the bankruptcy estate. Ultimately, the decision of whether to accept an unofficial proof of claim is left to the discretion of the bankruptcy judge overseeing the case.
Generally, those who are owed money by a party filing for Chapter 11, Chapter 12, or Chapter 13 bankruptcy, all of which involve a plan for repaying creditors, need to file a proof of claim in order to receive any funds. You also need to submit the form if the debtor is filing under Chapter 7, provided that there are funds available for distribution. In “no-asset” Chapter 7 cases, proof of claim isn’t necessary because there’s no money to divvy up.
Form 410 is a three-page document that must typically be completed and signed by the creditor, the creditor’s attorney, or an authorized agent. The information you’ll need to provide includes:
Along with the form, you should include copies of any documents that support your claim, such as purchase orders, promissory notes, invoices, account statements, mortgages, and contracts.
In addition to mailing the form to the appropriate district court, creditors may also file electronically, either through the court’s website or via a third-party bankruptcy claims agent. If you want confirmation that the proof of claim has been filed, you can include a self-addressed stamped envelope along with a copy of the form in your mailing, or you can visit the court’s Public Access to Court Electronic Records (PACER) system to see the filed form online.
For a variety of reasons, a party that owes you money may leave you off the court filing. That means you won’t receive a notice from the court clerk with your proof of claim deadline.
If you find out about the bankruptcy through an unofficial source, you should contact the individual or business that owes you money and ask for their bankruptcy case number. You can then call the district court clerk handling their case to have them verify the filing and ask for the proof of claim deadline. You can either access the form online or request that the clerk send you one through the mail.
Secured debts are prioritized for repayment over unsecured debts in a bankruptcy proceeding.
When you file a proof of claim, it’s typically accepted by the court unless the trustee, debtor, or another party in interest—that is, one with a financial stake in the case—objects to it. This can happen, for example, if the creditor listed an incorrect amount or falsely identified the amount as a secured debt when there’s no lien involved. If the proof of claim is accepted by the court, that doesn’t mean the full amount will be paid to the creditor. Based on the available funds, the trustee’s role is to repay creditors based on the type of debt.
Secured debts, such as mortgages and car loans, have a special status. Even if the court were to discharge these debts, the lienholder has the legal right to confiscate the property and sell it. Unsecured debts are lower in the pecking order, although so-called priority debts—including child support, alimony, and income taxes that have remained unpaid for fewer than three years—are paid before other unsecured debts, such as utility bills and credit card balances. If the bankruptcy estate doesn’t have enough funds to make all the creditors whole, which is common, an unsecured creditor may receive pennies on the dollar or possibly nothing at all.
