Types of Creditor Claims in New Jersey

While all debt may seem the same, it can be classified differently in bankruptcy. Knowing how your debt may be categorized can be very important to realize how your debt will be treated in bankruptcy. This understanding can help you determine how claims can be made by creditors and which debts may be eliminated in bankruptcy.

A New Jersey bankruptcy attorney can explain the types of creditor claims in New Jersey, so you can understand how your debt may be treated in a bankruptcy. They could fully examine your finances to help you take the steps that make sense for you.

Secured Claims

A claim in bankruptcy is the creditor’s request to receive payment of its debt. There are various types of creditor claims in New Jersey that can be made. One of the claims a creditor can make for secured debt is referred to as a secured claim which is a claim by a creditor for a debt that is protected through an interest in the property, such as a home or car loan.

For example, if someone owns a home, the lender usually will protect its loan by having an interest in the home. If the owner fails to pay their mortgage, the lender could proceed with a foreclosure action. With secured claims, the individual typically has some options with how to proceed, which include the following:

  • Continue to pay and remain current on secured debt
  • Surrender the secured property to the secured creditor
  • Reaffirm the debt with the secured creditor through a reaffirmation agreement

Unsecured Claims

Many claims fall under the category of unsecured claims. Unsecured claims are made for unsecured debt, which is debt that is not secured by the property. Common examples of unsecured debt include credit card and medical debt. Most debt that falls under the category of unsecured debt will be discharged in a bankruptcy claim. In other words, a person may no longer be liable for having to pay unsecured debt discharged in their bankruptcy.

Priority Claims

Priority claims are debts in bankruptcy that may not be discharged or eliminated in a bankruptcy claim. Put another way, a person may remain liable for any debt that falls within the definition of a priority claim. Priority claims can include child support, spousal support, and government taxes.

If someone files a chapter 13 bankruptcy, debts that are considered priority debts are given priority over other debts. In other words, priority claims are paid as part of a chapter 13 payment plan before money is paid to unsecured creditors.

Proof of Claims in New Jersey

In order for many creditors to receive payment of their claim under a chapter 13 plan, a proof of claim would need to be filed. A proof of claim is a request from a creditor for its debt to be paid. The proof of claim is typically made in a chapter 13 bankruptcy plan. However, in some situations, a proof of claim can be made in a chapter 7 bankruptcy where funds are available for creditors.

The proof of claim typically identifies the name of the lender as well as the amount of the debt owed to the creditor. Creditors are given a certain amount of time to file a proof of claim and may not be able to make a claim after the proof of claim deadline. For more information about the types of creditor claims in New Jersey, contact a well-established attorney.

Consult with an Attorney to Learn More About Types of Creditor Claims in New Jersey

The importance of understanding how debt will be classified can help you understand what to expect regarding the outcome of your bankruptcy. A New Jersey bankruptcy lawyer could further explain various types of creditor claims in New Jersey and how debt will be classified in your bankruptcy, so you are aware of how the different types of creditor claims may affect your situation. Contact a skilled bankruptcy attorney in New Jersey for more information.