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South Carolina bankruptcy and a creditor's proof of claim

South Carolinians who are considering bankruptcy should be aware of the insolvency proceeding process, which includes petitions and proofs of claim. Petitions are submitted by the person filing for bankruptcy when he or she is unable to fulfill existing financial obligations. Proofs of claim are submitted by creditors who seek payment through a bankruptcy estate.

A creditor that fails to file a proof of claim typically forfeits the right to receive compensation from the bankruptcy estate. In many cases, creditors will not file a proof of claim if much of the balance has already been paid and the amount eligible for collection is not worth the ensuing process. Unsecured creditors can file a proof of claim during a Chapter 7 or Chapter 13 bankruptcy, but creditors who possess a lien are not required to do so.

A proof of claim must include the debtor's personal identification and case number as well as the creditor's contact information, how much is owed, the type of claim being filed and a justification for filing a claim. This information is compiled in Form 10 and must be filed along with other debtor-creditor documentation. Bankruptcy attorneys may object to proofs of claim in cases where there is usurious interest, harassment, excessive penalties to the debtor, a lack of supporting documentation or incorrect information presented about the debtor.

Unlike Chapter 7, where a debtor's non-exempt assets are liquidated with the proceeds used to pay off creditors, Chapter 13 involves restructuring obligations and making payments over a three- to five-year period. It is designed for people who have a regular source of income. There are other eligibility requirements that an attorney can explain.

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