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What is a Claim (Bankruptcy) and How Does It Affect You?
Definition & Meaning
In the context of bankruptcy, a "claim" refers to a legal right to receive payment or an equitable remedy. This can include various types of rights, such as those that are secured (backed by collateral) or unsecured (not backed by collateral). A claim can be established even if it is not yet resolved in court, meaning it can be disputed or undisputed, and can arise from various situations, such as contracts or torts. Essentially, if someone believes they are owed money or a remedy due to a breach of agreement, they have a claim.
Table of content
Legal Use & context
Claims are central to bankruptcy proceedings, as they determine how debts are handled and prioritized. In legal practice, claims can arise in various areas, including:
Consumer bankruptcy
Business bankruptcy
Debt restructuring
Individuals and businesses can manage claims through legal forms and templates, such as those provided by US Legal Forms, to ensure they meet legal requirements and deadlines.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A contractor who has completed work but has not been paid can file a claim in bankruptcy for the amount owed.
Example 2: A person who has a personal loan that has not been repaid may have a claim against the borrower in bankruptcy proceedings. (hypothetical example)
Relevant laws & statutes
Claims in bankruptcy are primarily governed by the Federal Bankruptcy Code, specifically Title 11 of the United States Code. Key sections include:
11 U.S.C. § 101 - Definitions related to bankruptcy, including claims.
11 U.S.C. § 502 - Allowance of claims or interests.
Comparison with related terms
Term
Definition
Difference
Debt
An obligation to pay money to another party.
A claim can be based on a debt, but it encompasses broader rights, including equitable remedies.
Liability
A legal responsibility for a debt or obligation.
Liability refers to the obligation itself, while a claim is the assertion of that obligation in a legal context.
Common misunderstandings
What to do if this term applies to you
If you believe you have a claim in a bankruptcy case, consider the following steps:
Gather documentation related to your claim, such as contracts or invoices.
Consult with a legal professional to understand your rights and the process of filing a claim.
Explore US Legal Forms for templates that can help you prepare necessary documents.
In complex situations, seeking professional legal assistance is advisable to navigate the intricacies of bankruptcy law.
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