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Proof of Claim Violations

A proof of claim is simply a form submitted by a creditor to the bankruptcy court alleging how much you owe the creditor at the time your bankruptcy case is filed. This form must be filed with the clerk of the bankruptcy court where your bankruptcy case is filed. The claim must contain basic information, including your name, the case number, the name and address of the creditor, the basis for the claim, and other documents to support the claim.

Unsecured creditors--those with claims for credit cards debts, medical bills and the like--must file claims within 90 days after the first date set for the meeting of creditors. Creditors with secured claims like home mortgages, automobile liens and store-bought merchandise can file claims at any time during the bankruptcy case.

The proof of claim process is ripe with opportunities for your creditors to take advantage of and abuse the bankruptcy system. Examples include:

• Filing a claim for more than your actual outstanding balance on the date of filing;
• Filing a claim with no documentation or basis for the claim;
• Filing a secured claim that provides a substantially higher interest rate than either the underlying contract or the bankruptcy code allow;
• Filing a secured claim when the lien against the collateral has not been perfected or the debt is otherwise unsecured;
• Filing a claim that includes inflated fees and costs. For instance, a creditor may include attorney fees that the trustee and the bankruptcy court have not approved;
• Filing a claim that includes bogus charges such as 'Statutory Fees' when no statute authorizes the fee, 'Legal Fees' when no legal work was done, 'Corporate Advance Fees' when there is no basis whatsoever for the fee; and
• Filing a claim and then misapplying post-filing payments to charges that are to be resolved in the bankruptcy, also known as double-dipping. Or creditors may apply Chapter 13 trustee payments to debts incurred after filing bankruptcy, so that the original claim is not reduced by the payment received.

It is a federal crime to file a false or fraudulent claim in a bankruptcy case, and the official form for filing a proof of claim states the penalty for presenting a fraudulent claim: "Fine of up to $500,000 or imprisonment for up to 5 years, or both."

Proofs of claim are subject to objection under Bankruptcy Rule 3007. The trustee or the debtor may object to a creditor's proof of claim.

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