Types of Personal Bankruptcy

• There are two types of personal bankruptcy under the United States Bankruptcy Code, chapter 7 and chapter 13. Chapter 7 acts as an estate liquidation that sells your larger estate assets to pay your creditors. Chapter 13 sets up a long term repayment plan over a period of three to five years where payments are made to a trustee who distributes payments to creditors.
  
  

How to File for Bankruptcy

• It helps to visit a bankruptcy attorney. A bankruptcy attorney can help you decide what chapter of bankruptcy to file and create a bankruptcy petition to file with the bankruptcy court.
  
  

What is a Bankruptcy Claim?

• When you file for bankruptcy, you must notify all of your creditors via a bankruptcy matrix. In turn, those creditors may file a proof of claim with the bankruptcy court. This claim includes the total amount the creditor believes they are owed and any proof of that claim, including account statements or bills.
  
  

Who Holds a Claim?

• Bills that are delinquent or in arrears are sometimes bought and sold by collection companies. Once a claim is purchased, the collection company then owns the claim or is the "holder" of the claim. The collection company can then file a claim against you in your bankruptcy case. This can be confusing because the name of the creditor will be different while the debt they are claiming is the same.
  
  

Objecting to the Claim

• Once the holder of claim files a proof of claim with the bankruptcy court, you can review that claim and determine whether you agree with the claim or not. You have a right to file an objection to the claim and have a bankruptcy judge make the final decision as to whether the claim is included in your bankruptcy plan.