Creditor's Claim Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Creditor's Claim, written in plain English, along with examples of how it is used.
What is Creditor's Claim?
It is a the claim by the person or organisation (creditor) who is suppose to get the money from another person or entity who may have decalred themselve bankrupt or any person who is dead. Such claim needs to be in writing. For the claim from a dead persons estate, the claim needs to be in a prescribed format within a given period of time.
History and Meaning of Creditor's Claim
A creditor's claim refers to the demand made by a creditor for payment of a debt that is owed to them. In legal terms, this is a demand made by the person or entity that is entitled to receive the amount owed by an individual or organization who may have declared bankruptcy or who is deceased. Such claims must be made in writing and they have a prescribed format which needs to be followed. This ensures a fair and standardised approach is taken when dealing with such situations.
When a person or entity declares bankruptcy or passes away, their assets are distributed among their creditors and heirs according to a specific legal process. Creditors may file a creditor's claim during the probate process to ensure they are reimbursed for any debts owed to them by the deceased. In bankruptcy cases, creditors may file a proof of claim with the bankruptcy court to establish their right to receive payment from the debtor's estate.
Examples of Creditor's Claim
- A bank files a creditor's claim for the money owed by a customer who has filed for bankruptcy.
- The executor of a deceased person's estate receives a creditor's claim from a credit card company for unpaid balances on a credit card.
- A vendor files a creditor's claim for the goods delivered to a company which couldn't pay for them and has been declared bankrupt.
Legal Terms Similar to Creditor's Claim
- Proof of Claim: A document filed with the bankruptcy court by a creditor detailing how much the debtor owes them and why.
- Debtor: A person or organization that owes money to another party.
- Probate: The legal process of administering a deceased person's estate and distributing their assets to creditors and heirs.
- Bankruptcy: A legal process for individuals or organizations to eliminate or repay their debts under the protection of the federal bankruptcy court.