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Filing and Amending Claims in a Bankruptcy Case

A Primer for Those Holding Bankruptcy Claims Against a Debtor

Bankruptcy claims do more than simply determine the amount of money a creditor is owed or can receive as a distribution. Claims also can generate clout. Clout enables a creditor to sit on a creditor committee, have more leverage in negotiations, and claim a higher-priority right to payment – that is, to skip ahead in the bankruptcy claims’ distribution line.

In chapter 11 cases, the creditors with the largest unsecured claims against the debtor are typically invited to sit on a committee of unsecured creditors – which provides an opportunity to influence the bankruptcy case. The bankruptcy judge looks to the committee to review and endorse or oppose what the debtor proposes to do. The committee may retain attorneys and other professionals, such as financial advisors (paid from assets of the debtor’s estate), to assist with performing its tasks.

A Chapter 11 debtor needs “classes” of similar types of creditors to vote to confirm its plan for resolving the case’s major issues. A class is deemed to accept a plan if the “yes” votes constitute a sufficient quantity of votes within the class and reflect a sufficient proportion of the overall dollar amount of claims voted in that class. Larger claims, thus, are usually more important in the plan confirmation process because claimants can use their size to create clout to block a plan.

Now we know bankruptcy claims are important and that the larger the claim, the more invested in participating in the process the creditor should be. But what exactly are bankruptcy claims, and how do you, the creditor, get a big one?

Bankruptcy Claims Overview: Amount and Priority

A bankruptcy claim is any right to payment from the debtor. In asserting a claim, a creditor should be guided by a good-faith belief in the amount it is owed and the priority of the claim.

“Amount” refers to the cash owed to the creditor. This can include the accounts receivable showing on the creditor’s books and records and, in some circumstances, additional amounts. For example, the value of specialty goods manufactured under a purchase order and not yet shipped might be included in a claim. Similarly, minimum orders under a contract (that is, a promise to purchase a minimum quantity per month) and unexpired real estate leases can increase claim amounts. The economic value of damages the debtor has caused may also form the basis for the claim amount.

The “priority” of a creditor’s claim refers to its place in the payment line. The creditor’s position in the line matters greatly because most bankruptcy estates do not have enough cash to pay all of the claims in full.

Think of bankruptcy claims priority as one of those fancy pyramids of champagne glasses. The top levels of glasses (secured claims and administrative claims) are filled before the next levels of glasses (priority unsecured claims and then general unsecured claims) receive any champagne at all. No champagne is poured into the bottom-level glasses until after all of the higher levels are filled. If your claim has priority, your glass is at or near the top and will probably be filled; the glasses on the bottom could be partially filled or remain dry. And the equity holders – those who own the debtor – get paid (or even get their glass wet) only after all of the other glasses in the pyramid have been filled.

Scheduled Claims

At the beginning of its bankruptcy case, the debtor attempts to list the amounts and priorities of all claims against it. The debtor is required to file with the court schedules of assets and liabilities, including the following significant schedules:

  • Schedule D lists secured creditors (a creditor with specific collateral, such as a mortgage on a building).
  • Schedule E lists unsecured priority claims. The creditor has no collateral but special categories, like certain taxes, come into play.
  • Schedule F lists unsecured nonpriority claims. Most claims fall into this category.
  • Schedule G lists “executory contracts” (contracts in which each side has something further to do, like an apartment lease that requires the tenant to pay rent and the landlord to provide rented space). Executory contracts can generate both unsecured claims and administrative claims. Administrative claims arise during the case and stand ahead of priority unsecured claims.

Each general unsecured claim scheduled by the debtor may fall into one (or more) of three categories – with each category appearing on Schedule F in a column labeled contingent, unliquidated, or disputed:

  • A contingent claim is one for which nothing is owed yet. For example, in a potential claim for the return of a security deposit when the lease is still in effect, there is an obligation to give the deposit back, but not at this time.
  • An unliquidated claim is one for an amount that has not yet been finally determined. A request (or demand) for compensation for pain and suffering resulting from a car accident is an unliquidated claim, for example, until the court awards an amount.
  • A disputed claim is one for which the debtor has listed the amount the creditor has asked for even though the debtor does not agree with the creditor.

The Claims Process

The first step of the bankruptcy claims process for the creditor is verification of whether the creditor agrees with the debtor’s scheduled claim amount and priority and whether that claim is listed as contingent, unliquidated, or disputed (CUD). If the creditor agrees with the amount and priority, and the claim is not CUD, that portion of the claims process is over. The creditor need not do anything more. This is usually the case.

If the creditor sees that the schedule states an amount owed that differs from the actual amount owed or that the scheduled amount is CUD, the creditor should file a proof of claim using the appropriate proof of claim form (assuming the difference is material).

The bankruptcy court typically sets a claims bar date, a firm deadline by which a creditor must file a proof of claim or forever be barred from asserting a right to payment. Do not miss this deadline. There is no penalty for filing early, but filing late can be a reason for a filed claim to be eliminated.

Preparing the Proof of Bankruptcy Claim

Getting Records in Order

The best way to start preparing a proof of claim is by writing a simple summary of the reasons you are owed money. The summary can reflect an accounts payable aging, a contractual amount, interest, fees, returns, etc. Succinctly set forth how much you are owed and why. The summary can be handwritten or typed. The important part is that you explain in one or two pages the piece or pieces of your claim or claims.

Next, gather the paperwork that supports the amount you are owed as calculated in the summary and organize the paperwork by claim piece (this is the “support”).

If the first item on the summary sheet is a contract amount, the first attachment should be the contract. If the second item in the summary is an accounts payable aging, attach the relevant invoices and proofs of delivery. Follow this procedure until there is support for each number outlined in the summary.

Together, the summary and support demonstrate the basis for what you claim you are owed.

Completing the Proof of Claim Form

The proof of claim form includes lots of words, boxes, and code sections and can be confusing at first. Take it slowly. Once you understand how the form is organized, it is far less intimidating.

Keep the summary and support handy when you start on the proof of claim form itself. The debtor’s name and case number should be completed already, but if not, they can be found on the first page of most of the documents received from the court. The “name of creditor” should be the entity the debtor knows you as, not necessarily your name.

The form includes a box for the name and address for “where notices are to be sent” – this is very important. The debtor will send mail to this address, so make sure the address is correct and legible and is a place where mail is regularly opened and read. The debtor can object to your claim by mailing to this address, for example, and you need to know the objection has been made to respond quickly. If you relocate, update the address on the proof of claim form.

The amount of your claim should come directly from the summary. To be safe, you can inscribe “(see attached summary)” after the amount, but it is not necessary. The “basis for claim” on the form is a short description of the reason you are owed money. Examples include wages, purchased goods, and contract claims.

Some bankruptcy claims are secured by collateral. In other words, the creditor has a lien against one or more assets that secures payment of the obligation. For example, a mortgage on your residence, which secures your obligation to pay your home loan, is a lien. If you have collateral for your claim, complete Section 4 of the form in a way that matches the written contract and security agreements. For example, if you are owed $250,000 and were granted a lien against the debtor’s residence, which is worth $50,000, and you recorded the lien appropriately, then on the proof of claim form, you would list the secured claim at $50,000 and the unsecured portion at $200,000.

There is generally little value to asserting a secured claim for more than the value of the collateral. For your secured claim, usually, the most you can get is the asset itself. By overvaluing the secured portion of your claim, you undervalue the unsecured portion and might thereby limit the potential distribution of the unsecured portion of your claim.

Section 5 of the proof of claim form lists some specific types of claims that are entitled to priority – meaning they skip forward in the distribution line. Read each of these carefully to see if your claim is one of these types. There is no “harm” to seeking priority status, as the Debtor will seek to reclassify your claim if you are wrong, so long as you have a good faith belief in the priority claimed.

Filing the Proof of Claim Form

Make two copies of the executed proof of claim package (the summary, the support, and the proof of claim itself). Keep one copy. Mail the original and the other copy to the bankruptcy court (unless instructed by the court to send them elsewhere) and include a self-addressed, stamped envelope with a short note requesting that the filing entity send back the copy as proof that your bankruptcy claim was received on time. The returned proof of claim typically is date-stamped, which can help if you need to demonstrate later that the proof of claim was received before the claim’s bar date.

Amending Claims

There is no limit to the number of times a creditor can amend its bankruptcy claim, and generally, a creditor can amend a proof of claim even if the claims bar date has passed. If additional funds owed are discovered, simply complete a new proof-of-claim form and check the box indicating that the new claim amends a previously filed claim.

File early and often – do not hesitate to refile your claim (amending it) if you discover you have omitted an amount. You can assert a claim immediately upon the filing of the bankruptcy case (remember, a large claim can help a creditor achieve creditor-committee status) and amend it later.

A creditor files a proof of claim under penalty of perjury, so the creditor must honestly believe that what it asserts is owed is, in fact, owed. You can be wrong but not on purpose.

Finally, ensure that you assert the full amount of your bankruptcy claim before any objection to your claim is heard. An order disallowing your claim can be fatal to attempts to assert new or further amounts in the future.

The debtor can object to a proof of claim. Often this objection simply states that the debtor believes it owes an amount that’s different from the amount on the proof of claim form. This is commonly referred to as a “business records” objection because the debtor’s records differ from the proof-of-claim amount. This objection includes a deadline for the creditor’s response.

If the disagreed-upon amount is worth fighting about, it might be a good time to retain a lawyer. Alternatively, you can simply call the lawyer who objected and have the objection clarified or try to reach a compromise amount. It is common for an objection to be withdrawn, or the hearing on the objection to be postponed (set for a later date to allow the parties time to work out the disagreement) if the creditor is working to demonstrate the amount owing. Note that failing to respond to a claim objection can be fatal to your rights, so respond and appear at the hearing unless you know for certain that the objection was withdrawn or the hearing was postponed.

Maybe It’s Better Not to File

In rare circumstances, it is better not to file a proof-of-claim form – in other words, to give up the claim. By filing the form, a creditor submits to the jurisdiction of the bankruptcy court. The situations in which giving up the bankruptcy claim is preferable are uncommon and usually involve significant ongoing litigation or other complicating factors. In such a situation, a creditor should consult with an attorney. Most reputable bankruptcy attorneys will let the creditor know during the initial (and probably free) consultation if this is an issue to be taken into account in a particular case.


When you receive notice of a bankruptcy filing, file your claim early, file amendments as needed, and make sure you protect your right to receive payment on your claim.

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[Editors’ Note: To learn more about this and related topics, you may want to attend the following on-demand webinars (which you can listen to at your leisure, and each includes a comprehensive customer PowerPoint about the topic):

This article was originally published in March 20, 2019. It has been recently edited by Kateri Halbleib]

©2022. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.

About Michael Schwarzmann

Michael Schwarzmann has over 17 years experience providing advisory services to companies and their constituents, utilizing his legal and financial background to assist in identifying issues and implementing meaning value-added solutions. Michael has assisted clients in developing and evaluating business and turnaround plans, analyzing financial and operational performance, and formulating successful strategies to preserve or…

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About David Gottlieb

David Gottlieb, CPA, is a partner and the Bankruptcy and Insolvency services leader in Crowe’s Financial Advisory Services. Based in Los Angeles, he has more than 32 years of experience providing bankruptcy, insolvency, litigation support, and forensic accounting services. He has worked with clients in professional services, manufacturing, import-export, wholesale and retail sales, healthcare, hospitality,…

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