A claim is considered the creditor's right to payment against a Debtor who has filed bankruptcy.
Claims are generally written and filed by creditors. Creditors who hold a "claim" are given opportunity to voice their opinion and generally vote "yes" or "no" in favor of the debtor's bankruptcy reorganization plan. The claim outlines the total amount of money owed to the Creditor at the date of the bankruptcy filing and the priority of the debt.
There are three types of claims outlined in the United States Bankruptcy Code: Priority Claims, secured and unsecured claims.
- Priority claims include most taxes and the administrative costs of the bankruptcy proceedings.
Secured claims are paid out next and can include creditors who have the right to repossess certain types of properties.
Unsecured claims have the lowest priority, and the creditor generally does not have any particular property which can be repossessed.
Creditors receive claim forms and written notice of the bankruptcy.
Claims can include accounts payables, bank loans, contractual obligations or most other types of secured and unsecured debts. Companies who have filed for bankruptcy may have creditors who hold a trade claim which is an unsecured claim. Trade claims can include, but are not limited to, debts owed to lawyers, employees, leasing companies, trade vendors and other debtors. Companies who hold trade claims are paid in the same priority order as other bondholders and unsecured loan holders by the Bankruptcy Estate. Trade claims can include debts ranging from hundreds of dollars to millions of dollars.
More Help on Claim
- Bankruptcy Estate - The bankruptcy estate can includes all of the assets a Debtor has which can be liquidated by a court-appointed trustee in the bankruptcy liquidation process. - read more
- Creditor - Creditors can include businesses, individuals, organizations or the United State\'s government who is owed money for services or products provided to a second party in return for payment. - read more
- Debtor - A debtor is an entity or person who owes a debt or a service to another person or entity which can also be called a Creditor. - read more
- Priority Claims - United States Bankruptcy code outlines the priority order for claims to be repaid to creditors. - read more