After you file for bankruptcy, you’ll quickly discover that your creditors are eager to make claims. Creditor claims are official statements of your debts. At this point, your creditors are essentially lining up to ask the bankruptcy court to be paid as much as possible for what you owe them. A new bankruptcy case triggers a flurry of these creditor claims, and you’ll need to sort through them all. They fall into categories of secured, unsecured priority and unsecured nonpriority. It’s not always easy to determine which claim falls into what category.
How Do I Know Creditor Claims Are Filed?
As part of filing for bankruptcy, you’ll fill out official forms that include your personal information, debts, assets and which type of bankruptcy you’re selecting. Creditor claims will appear on Schedule D or Schedule E/F, depending on their type. Your bankruptcy attorney will likely pull credit report(s) to help you create a list of your debts. You may have forgotten about some debts or even think you don’t owe them.
What is a Secured vs. Unsecured Claim?
Secured claims come from debts where something is used as collateral such as a home, car or other assets. A creditor with a secured claim have a right to take or repossess collateral if payments are not made. A qualified bankruptcy attorney can advise you of the options that you have regarding secured debts in a bankruptcy case. If you want to keep your home and you are behind on your payments, a continue making payments you might select Chapter 13 bankruptcy, which can help you get caught up on the debt so you can keep the housel. On the flip side, an unsecured claim doesn’t have a house – or any other asset – attached to it. Credit card bills and medical debts are two common forms of unsecured debts. Unsecured claims are also sorted into two more categories: priority and nonpriority.
What are Priority vs. Nonpriority Claims?
Your unsecured claims will be split between priority and nonpriority claims depending on the type of debt. Credit card balances, medical bills and personal loans are all nonpriority debts and could likely be eliminated by bankruptcy. Your credit card companies and medical providers may have to accept that they might not get paid. However, alimony, back child support, tax debts and settlements from drunk driving are all priority unsecured debts. They must be paid back, no matter what bankruptcy route you take. Filing for bankruptcy is still a good idea because it will limit your overall debt and allow you to handle your priority unsecured debts more easily.
What If I Object to Claims from Creditors?
Each creditor will be required to provide proof of their claim to the bankruptcy court. You can see and review all the claims they’re making. So, what happens if you disagree about owing a debt? Don’t worry. Objecting to creditor claims is common and the bankruptcy court will allow you to file an objection to a claim if you have a viable legal argument against owing the debt. Common reasons for objections include wrong debt amounts, you shouldn’t have to pay interest or penalties, the claim is filed to harass or the creditor simply doesn’t provide enough proof. Your bankruptcy attorney will guide you through this process, to ensure it goes smoothly and to set you up for the best future possible.
Sawin & Shea – Indianapolis Bankruptcy Attorneys
Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.