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If you're owed money by a company or individual that has filed for bankruptcy, you likely have a "claim" against that bankruptcy estate. Understanding how claims work is essential for protecting your interests and maximizing your recovery. This guide walks through the fundamentals. Creditors chasing an estate in probate file a claim against the estate — deadlines vary by state. LawDepot's probate templates handle the state-specific filing format.

What Is a Bankruptcy Claim?

A bankruptcy claim is a formal, documented right to payment from a bankruptcy estate. When someone or a company files for bankruptcy (Chapter 7, Chapter 11, Chapter 13, etc.), their assets are liquidated or their debts are reorganized. A claim gives you a legal position in that process—you're recognized as someone owed money and have a right to share in any available assets or payment plan.

Without filing a claim, you have no legal standing to receive any distribution, even if the debtor owes you money.

Types of Creditors and Priority Levels

Not all claims are treated equally. Bankruptcy law assigns priority levels based on the type of creditor you are:

Secured Creditors

These creditors have a "security interest"—a lien on specific assets (like a mortgage on a house or a lien on equipment). Secured creditors are paid first from the sale of their collateral, ahead of unsecured creditors.

Unsecured Creditors

These creditors have no lien. They include credit card companies, medical providers, and general vendors. Unsecured creditors are paid after secured creditors and administrative expenses, from remaining estate assets.

Priority Unsecured Claims

Some unsecured claims have statutory priority. These include employee wages (up to a cap), child support, alimony, and certain tax claims. Priority unsecured creditors are paid before general unsecured creditors.

General Unsecured Claims

These are paid last, after all priority claims. If there are insufficient assets, general unsecured creditors receive nothing or a small percentage recovery ("cents on the dollar").

Filing a Proof of Claim

To participate in a bankruptcy distribution, you must file a "Proof of Claim"—an official court form that documents your claim amount, the basis for the debt, and supporting evidence. The bankruptcy trustee or court uses these forms to determine who gets paid and how much.

Proof of Claim deadlines are strict—miss the deadline and you typically lose your claim entirely. The deadline is usually 70 days after the bankruptcy petition is filed.

Claim Valuation in Bankruptcy

The amount you recover on a claim depends on several factors: your claim's priority, the total estate assets, and the number of claims competing for those assets. A high-priority claim against a large estate might recover 100 cents on the dollar. A low-priority claim against a small estate might recover a few cents on the dollar—or nothing.

Key Takeaways

What happens if I don't file a Proof of Claim?
You lose your right to any distribution in the bankruptcy. The debtor is discharged from the debt and you have no remedy. Always file before the deadline.
Can I file a claim after the deadline?
In rare cases, courts allow late filings for "excusable neglect," but this is difficult. Assume the deadline is firm and file early.
How long does a bankruptcy case take?
Chapter 7 (liquidation) typically takes 3–6 months for distributions. Chapter 11 (reorganization) can take years. Chapter 13 (wage earner) is a 3–5 year plan.