Bankruptcy
Considering the nature of the collection business, bankruptcy filings are an unfortunate and common occurrence. Either Silver & Associates can file the proof of claims for your office or we will gladly assist you in establishing procedures for simplifying the process.
For a detailed look at bankruptcy, you may wish to access an online brochure, provided by the Administrative Office of the United States Court – Bankruptcy Basics.
The difference between Chapter 7, Chapter 13, and Chapter 11 bankruptcy
Chapter 7: This applies to the individuals or businesses that cannot pay their debts based on their income. Except for exempt property as defined by state laws, a debtor’s assets are auctioned off to satisfy creditor claims. About 70% of all cases are filed under Chapter 7.
Chapter 11: This gives a distressed business a reprieve from creditor claims while it continues to function and works out a repayment plan, but the bankruptcy judge oversees all-important decisions. The business is granted three months initially to draft a plan, after that, anyone can submit a plan. In some cases, the judge will assign a trustee to oversee the business. The amount you will have to repay depends on the amount of property you own and the types of debts you owe. Most Chapter 11 cases end up in Chapter 7 liquidation.
Chapter 12: This process is designed specifically to help farmers reorganize.
Chapter 13: Under Chapter 13, individuals or couples are allowed to work out a repayment plan of up to five years. According to the Bankruptcy Division of the Administrative Office of the U.S. Courts, one of every ten individuals or couples will file Chapter 13 in their lifetime. Chapter 13 is less expensive and less complex than Chapter 11, but not everybody qualifies for Chapter 13 bankruptcy. Consumers with secured debts under $871,550 and unsecured debts under $269,250 can file for Chapter 13. Consumers with debts in excess of the Chapter 13 debt limits and businesses can file for Chapter 11 -- a complex, time-consuming, and expensive process. Consumers for this reason rarely use Chapter 11, but many businesses use it because it allows them to stay in business rather than close their doors.
How to Prepare and File a Proof of Claim
The following are guidelines to assist you in filing of a Proof of Claim form:
- At the top of the form, after the words “In the matter of”, fill in the name of the debtor, complete the Case Number, District and State information as shown on the bankruptcy notice you received.
- Using the descriptions to the left of the Proof of Claim form, complete the sections 1, 2, and 3 with those descriptions that are applicable to your company.
- On #4 of the form, fill in the amount of money due your company along with a description of the debt. Complete the remaining portions of the form that are applicable.
- At the bottom of the Proof of Claim form sign on the indicated line.
- It is important to attach a statement of account to your claim.
For Chapter 7 & 11 cases, you need only file the original Proof of Claim form with attachments.
For Chapter 13 cases, a claim must be filed in duplicate so that the Clerk’s office can forward a copy to the Trustee’s office. All support documents, if applicable, must be attached to both the original and the copy of the claim.
If you want a confirmed copy returned, you must file an extra copy along with a self-addressed stamped envelope.
