Not all debts are treated equally in Texas bankruptcy petitions. If you feel overextended and need to stop communications from debt collectors, you should understand the types of creditor claims in Dallas and how a bankruptcy court will address different classes of claims.
Attorney Reed Allmand, who is double board-certified in Consumer Bankruptcy by the Texas Board of Legal Specialization and the American Board of Certification, believes in helping good people to get a fresh start with Chapter 7 or 13 bankruptcy petitions. He and his team can review your debts, and a bankruptcy attorney can determine how they can be classified for full or partial repayment with a petition that you might file.
What Are the Different Classes of Creditor Claims?
Most creditor claims in Dallas bankruptcy cases fall into one of three categories:
Secured Claims
Physical collateral generally backs these debts, such as a house that the debtor mortgaged or a car that is subject to a lien. By law, secured claims are paid off in bankruptcy proceedings before other types of creditor claims. If the value of the collateral is less than the claim amount, which frequently happens, for example, with car loans, the lender’s claim secures only up to the actual collateral value. The balance of the loan is then treated as a general unsecured claim.
Priority Unsecured Claims
All unsecured claims have no specific collateral backing, but state law gives priority to debts such as child support, alimony, and certain tax liens over other general unsecured debt. Chapter 11 or 13 repayment plans require remitting the full amount of general unsecured claims.
General Unsecured Claims
This is a catch-all category of all other debts, including, for example, medical bills, personal loans, utility payments, and credit cards. These claims are last in line for payments, and the bankruptcy court may reduce the principal amounts of unsecured debts or discharge them completely in the final order.
How is the Legitimacy of a Creditor Claim Verified?
In all Dallas bankruptcy cases, creditors must submit proof of their claim on Form 410. The information that the creditor provides on this form is used to determine the version of the claim that the creditor has. An experienced attorney, like Reed Allmand, will closely examine each creditor’s proof of claim to confirm that the claims are classified correctly and that the creditor is not given a payment preference that it does not deserve. If a creditor does not file a proof of claim, they may forfeit their right to recover any repayments.
Do Bankruptcy Courts Consider Any Other Types of Creditor Claims?
A few types of creditor claims do not fit neatly into any specific categories in Dallas bankruptcy cases. Courts might give them priority or resolve them with mechanisms that are specific to the claims. For example, administrative claims, which generally include the costs of a bankruptcy filing, usually have a high priority.
When a bankruptcy petitioner challenges the amount or validity of a creditor claim, the court will generally resolve the dispute before categorizing it. Further, some claims may be contingent on the occurrence of specific events. Courts address these claims on a case-by-case basis, often by estimating their value. Your attorney can provide more details on how the court might address contingent claims in your case.
Call Allmand Law Firm for Help With Different Kinds of Creditor Claims in Dallas
Reed Allmand applies a results-driven approach to all bankruptcy petitions. This facilitates the proper classification of the types of creditor claims in Dallas and fair treatment of both the debtor and creditor.
Please call our office today to schedule a consultation and learn how we can help you get the fresh financial start you need and deserve.
