If you live in New Jersey and are owed a debt, but the person who owes you money has filed for bankruptcy, you may be wondering what you can do to collect payment. Once you receive notice that a debtor has filed bankruptcy, you are no longer allowed to contact them directly to demand payment. Instead, you must file a proof of claim with the bankruptcy court.

What is a Proof of Claim and What Are the Requirements?

A proof of claim is a statement to the bankruptcy court filed by a creditor who is requesting payment. A proof of claim must list the debtor’s name, the creditor’s name and address, the bankruptcy case number, the amount owed and any supporting documents which show the amount and validity of the debt.

Creditors must also state whether or not the debt is “priority” which means that the creditor is entitled to payment before other debts are paid. An example of a priority debt is child support.

What is an Asset Case?

After a debtor has submitted a list of all their property in the bankruptcy case, the trustee will declare it an “asset” case where some property is available to be distributed to creditors or a “no-asset” case. If the case is declared an asset case, the trustee will send notice to creditors along with the deadline for filing a proof of claim. Proofs of claim are usually only filed in asset cases.

Payment of Priority Claims

After a case is declared an asset case, the debtor’s assets will be turned over to the bankruptcy trustee. The trustee will take a small percentage of the amount collected and then distribute the remaining proceeds to creditors. Priority creditors must be paid first, and then the remaining creditors will receive a distribution according to their percentage share of the total amount of debt.

What Creditors Should Do

If you are a creditor involved in a bankruptcy proceeding, make sure that you are aware of any deadlines to file a proof of claim. The timeline will depend on what type of bankruptcy was filed, so you must read all documents related to the bankruptcy carefully. In most cases, it might be best to consult a bankruptcy attorney for professional guidance.