Proof of credit is a document filed in court by a creditor owed money by a person filing for bankruptcy. Creditors must present proof of credit, and debtors must verify its accuracy. The debtor’s responsibility is to make a list of everyone owed money, and creditors are expected to meet deadlines and have accurate paperwork. The correctness of credit proofs submitted at the end is crucial for a fair transaction.
In law, a proof of credit is a document filed in court by a party owed money by a person filing for bankruptcy. The document is required in both Chapter 7 and Chapter 13 bankruptcy filings in the United States. It is the legal proof normally required of the creditor to receive any payment once the bankruptcy case has been resolved.
Although it refers to a debt of the person filing for bankruptcy, it is the responsibility of each creditor, not the debtor, to present proof of credit. However, the debtor is required to verify the accuracy of all credit proofs. If creditors’ claims do not match the numbers on the debtor’s records, one or both parties could face reprimands or fines.
To ensure that everyone who is owed money is included in the bankruptcy settlement, the debtor’s first step when filing is normally to make a list of everyone who is owed money. The reflected amounts should be accurate. Including everyone owed money and listing the correct monetary amounts prevents any possibility of perjury charges against the debtor. It is also the debtor’s responsibility to ensure that this list is presented to the court in a timely manner. This ensures that all creditors are informed and have the opportunity to present their credit evidence well in advance of the bankruptcy hearing date. Once the court has notified all creditors and provided them with proof of credit forms, the debtor is free from this part of the proceedings until the time limit for proof of credit has expired.
Creditors are generally expected to be as honest and helpful as the debtor. The court traditionally expects creditors to meet deadlines. They are generally expected to have their paperwork neat and accurate.
Once that due date is reached, the debtor is presented with evidence. The debtor normally reviews the documents filed with the attorney on the case. Although the court normally reviews the evidence to ascertain its accuracy and duplication of claims, it is normally advisable for the debtor to examine it one last time before proceedings begin.
Early in the case, evidence from the claim is normally invoked repeatedly throughout the hearing process. Depending on which bankruptcy chapter is filed and how the judge considers a variety of extenuating circumstances, creditors’ claims are given priority for payment. At this point, neither the debtor nor the creditors have any opportunity to review their statements, so the correctness of the credit proofs submitted at the end is very important for the transaction to be fair and equitable for all parties involved.
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