When a debtor files bankruptcy, creditors are required to file a proof of claim if they want to have a chance at payment during the bankruptcy. If a debtor does not object to the proof of claim after it is filed, then the bankruptcy court will basically deem it “allowed.” But what does that mean? When the bankruptcy court rules that a proof of claim is allowed it means that the creditor’s claim is valid and must be paid if possible during the bankruptcy. This will have a significant impact on priority, non-dischargeable and secured debt.
For example, if a child support claim is made during your bankruptcy that inaccurately inflates the amount owed and you fail to challenge it during the bankruptcy, you may not be able to do so afterwards. Because the claim will be deemed allowed without objections, you could end up paying that inflated amount after your bankruptcy case is closed. This scenario could apply to student loans, taxes or any other priority or secured debt.
To avoid being stuck with bills that have inaccurate or inflated amounts, carefully check all creditor claims during your bankruptcy. If you spot something that is inaccurate, work with your bankruptcy attorney to immediately file an objection to the creditor’s claim.