What does Claim mean?
A claim is a formal written assertion by a creditor of their right to a payment from the debtor during the bankruptcy process. The claim can be paid through the liquidated proceeds collected for distribution to creditors or through a payment plan approved by the bankruptcy court.
A claim in a bankruptcy case must be made by all creditors wanting to get paid during the bankruptcy process. By formally stating their claim, creditors allow the bankruptcy court to legally deal with all debts the filing debtor has listed in their bankruptcy petition for bankruptcy protection. This act protects the integrity of the bankruptcy estate.
Any claim not made by a creditor within a certain time frame may be subject to discharge by the bankruptcy court. By making a valid claim, the bankruptcy court recognizes the creditor's potential right to participate in the bankruptcy process.
There are three different types of claims that can be paid during the bankruptcy process: priority claims, secured claims, and unsecured claims. Priority claims can include student loans, legal costs associated with the bankruptcy case, certain taxes, spousal and child support, certain wages and commissions and certain court penalties and fines. Secured claims can include any type of real property such as a car or home. Unsecured claims are any debts which are not secured by collateral such as credit card debts and medical bills.