Claim In Bankruptcy Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Claim In Bankruptcy, written in plain English, along with examples of how it is used.
What is Claim In Bankruptcy?
It is a document filed by the people who owe money to a person or company who has declared itself bankrupt making a claim against money or assets available.On receipt of the claim they would be send a notice whether their claim is accepted and in case of lack of funds their claim is rejected.
History and Meaning of Claim In Bankruptcy
A "Claim In Bankruptcy" is a legal document filed by a creditor who is seeking payment from an individual or entity that has filed for bankruptcy. The purpose of this claim is to participate in the distribution of assets available during the bankruptcy process. The claim may be based on money owed or property that has not been returned. The bankruptcy court decides whether the claim is accepted, rejected or reduced.
In the US, the process is handled under Title 11 of the United States Code, which is commonly known as the Bankruptcy Code. The Bankruptcy Code was first established in 1978 and has been amended numerous times since. The primary goal of bankruptcy law is to provide a fresh financial start for honest individuals while ensuring that creditors are paid to the extent possible.
Examples of Claim In Bankruptcy
A supplier files a claim in the bankruptcy of a retailer who owes them money for goods previously delivered.
An employee files a claim for unpaid wages in the bankruptcy of their employer.
A landlord files a claim in the bankruptcy of a tenant who has not paid rent.
A customer files a claim in the bankruptcy of a company that did not deliver goods as promised.
Legal Terms Similar to Claim In Bankruptcy
Debt: This pertains to the money or property owed to someone.
Creditor: A person or entity who is owed money.
Chapter 11 Bankruptcy: A type of bankruptcy that allows a business to reorganize and stay in operation.
Trustee: An appointed person who manages the bankruptcy estate and oversees the distribution of assets.
Liquidation: A type of bankruptcy that involves selling all the debtor's assets to pay off its debts.