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In the context of a Chapter 7 bankruptcy, individuals may have options for managing property that's subject to a secured claim. Understanding these options is crucial for optimal decision-making. 

In the context of a Chapter 7 bankruptcy, individuals may have options for managing property that's subject to a secured claim. The choice often depends on the debtor's financial situation and the nature of the property. Understanding these options is crucial for optimal decision-making. This Guide will outline the four options in bankruptcy and then focus specifically on reaffirmations and “ride through” options.

Definition: Choosing to "surrender" means the debtor willingly gives up the collateral to the secured creditor, freeing themselves from any further obligations related to that property.

Legal Requirement: As stipulated by 11 U.S.C. § 521(a)(2)(A), within 30 days of filing for bankruptcy, a debtor must transparently state their intentions concerning the collateral.

Interpretation and Ambiguities: The term "surrender" isn't directly defined within the Bankruptcy Code. This has led to various interpretations. Some creditors believe that it entails physically handing over the property, but case law often suggests it merely involves making the property accessible to the creditor.

The debtor should neither hide nor make the collateral difficult for the creditor to access.

After the bankruptcy filing, it's the debtor's responsibility to communicate with the creditor, providing details on when and where the collateral can be collected.

Definition: "Redemption" allows debtors to clear the secured debt by paying the creditor an amount equivalent to the current replacement value of the property, not the total owed amount.

Legal Context: This option is supported by 11 U.S. Code § 722 and 11 U.S. Code § 506(a)(2).
Example: If a car, which serves as collateral, has a current replacement value of $500, but the associated debt is $2,000, redemption permits the debtor to pay only $500 to own the car free and clear.

The debtor initiates the process by filing a motion to redeem.

Once the court approves the motion, the redemption amount must be settled within a 30-day window.
Determining Property Value: It's crucial to have an accurate valuation of the property, as this will determine the redemption amount.

Assistance from Banks: Many banks understand the predicament of debtors and have specialized redemption programs to facilitate the process.

Legal Foundation: The framework for reaffirmation is found in 11 U.S.C. §§ 524(c) and (k).

Definition: "Reaffirmation" involves the debtor and creditor agreeing that the debtor will remain responsible for the debt, allowing them to keep the property.

The creditor must consent to the reaffirmation process.

The debtor typically needs to be current on their contractual payments for most creditors to even consider a reaffirmation.
Reaffirmation agreements have a mandatory language to ensure clarity and mutual understanding.

The reaffirmation agreement has to be presented to the Court before the issuance of a discharge order.

A lawyer representing the debtor may certify that the reaffirmation won't cause undue financial hardship. If this isn't possible, the Bankruptcy Court must give its stamp of approval.

Opt-out Mechanism: If a debtor has second thoughts, they can terminate the reaffirmation agreement by notifying the creditor either before the discharge order's issuance or within 60 days of the agreement's filing.

Definition: A less conventional method, "Ride Through" lets a debtor retain the property and continue regular payments without officially reaffirming the debt.

Legal Nuances: This approach isn't directly recognized in the Bankruptcy Code. Nonetheless, if executed, the debtor's personal financial obligation gets discharged according to 11 U.S.C. § 524, but the creditor's lien on the property remains intact.

Engaging in a ride-through can be risky, especially for critical assets.

Several car finance companies, even if payments are up-to-date, don't allow ride-throughs. However, this method might be applicable and beneficial for certain mortgage debts.

Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.

Chapter 7 "Ride Through" Considerations

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Your Guide to Reaffirmations

Chapter 7 Bankruptcy: Managing Property with a Secured Claim

In previous articles, we've provided comprehensive resources to make it easy to file a Proof of Claim. If you haven't already, make sure to check out our previously published Proof of Claim resources:

Read about how to file a Proof of Claim in our article "The Ultimate Guide to Filing a Bankruptcy Proof of Claim"

Read about each section of the Proof of Claim in our article "The Bankruptcy Proof of Claim (with Pictures)"

Read about the 5 most common Proof of Claim mistakes in our article "5 Mistakes Creditors Make Filing Claims"

Test your comprehension of the basics for filing a Proof of Claim. Take our 10-minute quiz to gauge your knowledge and get feedback on areas to improve.

File a Proof of Claim effortlessly with our universal form. Sign up and begin at no cost.

In this article, we want to provide more insight into issues that can arise from Proofs of Claim. Here are 5 additional issues related to Proofs of Claim:

Usually, the answer is no. Fed. R. Bankr. P. 3002(c) states: “In a voluntary chapter 7 case, chapter 12 case, or chapter 13 case, a proof of claim is timely filed if it is filed not later than 70 days after the order for relief under that chapter or the date of the order of conversion to a case under chapter 12 or 13.”

However, there are some limited exceptions. These exceptions are summarized as follows.

Governmental Units (3002(c)(1)): A governmental unit has 180 days from the date of the order for relief to file a proof of claim.

Infant or Incompetent Person (3002(c)(2)): If a creditor is an infant or incompetent person or their guardian/conservator, the court may extend the time.

Judgments on Unsecured Claims. (3002(c)(3)): An unsecured claim which arises in favor of an entity or becomes allowable as a result of a judgment may be filed within 30 days after the judgment becomes final if the judgment is for the recovery of money or property from that entity or denies or avoids the entity's interest in property.

Claims Arising from Rejection of an Executory Contract or Unexpired Lease (3002(c)(4)): A claim arising from the rejection of an executory contract or unexpired lease is due within a specified time set by the court.

Notice of Dividend (3002(c)(5)): If the trustee reverses a prior determination of no assets and then indicates a dividend is possible, then a creditor will have at least 90 days to file a proof of claim.

On Motion to Extend Deadline (3002(c)(6)): On motion filed by a creditor before or after the expiration of the time to file a proof of claim, the court may extend the time by not more than 60 days from the date of the order granting the motion. The motion may be granted if the court finds that the notice was insufficient under the circumstances to give the creditor a reasonable time to file a proof of claim.

Chapter 13 Cases; Secured Claims On Principal Residence (3002(c)(7)): In a Chapter 13 case, if a claim is secured by the debtor's principal residence, a creditor must file the proof of claim within with the attachments required by Rule 3001(c)(2)(C) within the 70 day deadline. However, the attachments required by Rule 3001(c)(1) and (d), filed as a supplement to the claim, are due not later than 120 days after the order for relief is entered.

Courts have generally held that no other extensions of time (other than the exceptions above) can be granted to file the claim.  Further, courts have also indicated that the excusable neglect standard in Fed. R. Bankr. P 9006(b) does not permit an extension of time.

2. Who has the burden of proof in a claim objection proceeding?

The debtor has the initial burden of proof to demonstrate why the claim should be disallowed.  This is because Fed. R. Bankr. P. 3001(f) states that a properly filed proof of claim constitutes prima facie evidence of the validity and amount of the claim.  

If the debtor meets that burden, then it shifts to the creditor.

The evidentiary standard is usually by the preponderance of the evidence. 

Note, if the creditor’s claim is not properly filed (meaning it meets all the requirements for a proof of claim including attachments etc.) then there is no prima facie validity and the creditor will bear the initial burden. 

3. Can another document be construed as an informal proof of claim?

Yes, in limited circumstances. A document filed before the deadline may qualify as a timely informal Proof of claim. 

A creditor seeking to use the informal proof of claim doctrine bears the burden of proof.  The elements a creditor must demonstrate vary in different jurisdictions but generally require that the document

Must have been timely filed with the bankruptcy court and become part of the judicial record; 

State the existence and the nature of the debt; 

State the amount of the claim against the estate;  

Evidence the creditor's intent to hold the debtor liable with the debt.

Additionally, several courts consider whether given the particular surrounding facts of the case, it would be equitable to treat the document as a proof of claim. Courts consider whether the claimant is sophisticated; whether the claimant had actual notice of the bar date; and whether the claimant was intimately involved in the debtor's case. Courts considering this prong are less likely to employ the informal proof of claim doctrine where the creditor is represented by counsel as attorneys practicing in bankruptcy court are with a general knowledge of the Federal Rules of Bankruptcy Procedure. Courts are also less likely to employ the doctrine if permitting the late claim would significantly affect the payout to creditors with timely filed claims. See In re Delucia, No. 22-35747 (CGM), 2023 Bankr. LEXIS 2358 (Bankr. S.D.N.Y. Sep. 26, 2023).

A statute of limitations is a law that sets the maximum period of time, after certain events, that legal proceedings based on those events may be initiated. In other words, it prescribes how long someone has to bring a lawsuit after the act has occurred. After the expiration of this period, unless a legal exception applies, the claim is generally barred, meaning it can't be pursued in court.

The purpose of a statute of limitations is to ensure that claims are brought within a certain time frame when evidence is still relatively fresh, witnesses are available, and memories are not unduly faded. It provides a sense of legal certainty and fairness, ensuring that potential defendants are not indefinitely exposed to litigation or prosecution.

Statutes of limitations vary depending on the jurisdiction and the type of claim. For instance, personal injury claims might have a different limitation period than breach of contract claims. 

Beware filing claims that can’t be raised in another court because a debtor can easily object to the claims and get them disallowed.

Midland Funding, LLC v. Johnson, 581 U.S. 224, 137 S. Ct. 1407 (2017).  The Supreme Court held that filing a proof of claim for a debt beyond the statute of limitations is not punishable by the Fair Debt Collection Practices Act.

5. Do arbitration clauses in contracts require an objection to claim be arbitrated?

A contractual arbitration clause is a provision in a contract that requires the parties to resolve their disputes through arbitration rather than through litigation in the court system. Arbitration is a form of alternative dispute resolution (ADR) where disputes are resolved outside of the court system by one or more neutral third parties, known as arbitrators.

Here are some key aspects of contractual arbitration clauses:

Binding vs. Non-Binding: Most contractual arbitration clauses require binding arbitration, which means the decision of the arbitrator(s) is final and cannot typically be appealed in court. Non-binding arbitration, on the other hand, allows the parties to pursue litigation if they are not satisfied with the arbitration result.

Selection of Arbitrators: The clause may specify how arbitrators are to be chosen, often from a recognized arbitration institution or service.

Procedure: The clause may lay out specific procedures to be followed during arbitration, or it might reference rules from established arbitration organizations.

Location: The clause can designate a specific location where the arbitration will take place.

Governing Law: Like other contractual clauses, the arbitration provision may specify which jurisdiction's laws will govern the arbitration proceedings.

Costs: The clause might specify how costs of the arbitration will be shared or allocated.

Confidentiality: Often, arbitration clauses include terms about the confidentiality of the proceedings and the final decision.

Arbitration clauses are popular in commercial contracts for a variety of reasons. They can offer a more expedited and private resolution process compared to traditional litigation. However, they can also be controversial, especially in consumer contracts, because they often prevent individuals from pursuing class action lawsuits and might be perceived as limiting individuals' access to the courts.

In bankruptcy courts concerning objection to claim the courts generally rule that matters affecting the validity of the claim are “core” proceedings and must be addressed in the bankruptcy court forum.  However, some counterclaims made by a debtor against a creditor may be arbitrated.

Johnson v. S.A.I.L. LLC (In re Johnson), 649 B.R. 735 (Bankr. N.D. Ill. 2023).  

“The Supreme Court has guided lower courts to aid their determination of whether to enforce an agreement to arbitrate or to except such an agreement in favor of litigation. See Shearson/American Exp., Inc. v. McMahon, 482 U.S. 220, 227, 107 S. Ct. 2332, 96 L. Ed. 2d 185 (1987) [hereinafter, McMahon] ("To defeat application of the Arbitration Act in this case, therefore, the McMahons must demonstrate that Congress intended to make an exception to the Arbitration Act ... an intention discernible from the text, history, or purposes of the statute."). Generally, in commercial disputes, an arbitration agreement between parties must be enforced. The Federal Arbitration Act ("FAA") requires it. See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S. Ct. 1238, 84 L. Ed. 2d 158 (1985) ("[I]nsofar as the language of the [Federal Arbitration] Act guides our disposition of this case, we would conclude that agreements to arbitrate must be enforced, absent a ground for revocation of the contractual agreement."). However, there is no national policy favoring arbitration. See Gotham Holdings, LP v. Health Grades, Inc., 580 F.3d 664, 666 (7th Cir. 2009) ("The Federal Arbitration Act eliminates hostility to private dispute resolution; it does not create a preference for that process."). "The federal policy is about treating arbitration contracts like all others, not about fostering arbitration." Morgan v. Sundance, Inc., ___ U.S. ___, 142 S. Ct. 1708, 1713, 212 L. Ed. 2d 753 (2022).

“When an arbitration demand is made in a bankruptcy case, however, a conflict exists as to whether a bankruptcy court should enforce the bilateral arbitration agreement, or its in rem jurisdiction over the claims under the Bankruptcy Code. The court must address the two statutory schemes — the FAA and the Bankruptcy Code — and the potential conflict between them. Neither the Supreme Court nor the Seventh Circuit have addressed this narrow issue. …

“Because "[t]he preeminent concern of Congress in passing the [Federal Arbitration] Act was to enforce private agreements into which parties had entered," courts must "rigorously enforce agreements to arbitrate, even if the result is 'piecemeal' litigation[.]" Dean Witter, 470 U.S. at 221 (emphasis added). See McMahon, 482 U.S. at 226 ("The Arbitration Act, standing alone, therefore mandates enforcement of agreements to arbitrate statutory claims."); Moses H. Cone, 460 U.S. at 20 ("[T]he relevant federal law requires piecemeal resolution when necessary to give effect to an arbitration agreement.") (footnote omitted).

“As is the case with any statutory directive, the FAA's "mandate may be overridden by a contrary congressional command." McMahon, 482 U.S. at 226. …

“The party seeking to prevent arbitration "bears the burden of proving that the claims at issue are unsuitable for arbitration." Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91, 121 S. Ct. 513, 148 L. Ed. 2d 373 (2000). See McMahon, 482 U.S. at 227 ("The burden is on the party opposing arbitration ... to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue."); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S. Ct. 1647, 114 L. Ed. 2d 26 (1991) ("the burden is on Gilmer to show that Congress intended to preclude a waiver of a judicial forum"). …

“In order to determine whether Debtor has met her heavy burden of showing a clearly expressed congressional intention "to preclude a waiver of judicial remedies for the statutory rights at issue[,]" Green Tree, 531 U.S. at 90, the court may consider three different sources. "That intent must be deducible from (1) the statute's text; (2) its legislative history; or (3) 'an inherent conflict between arbitration and the statute's underlying purposes.'" Moses v. CashCall, Inc., 781 F.3d 63, 71 (4th Cir. 2015) (quoting McMahon, 482 U.S. at 227).

“Neither the Supreme Court nor any Circuit Court of Appeals has found that the Bankruptcy Code's text or legislative history clearly express an intent to except claims from arbitration. See, e.g., Jalbert v. Zurich Am. Ins. Co. (In re Payton Const. Corp.), 399 B.R. 352, 361 (Bankr. D. Mass. 2009) ("The parties and authorities agree that neither the text nor the legislative history of the Bankruptcy Code and related statutes clearly expresses  [*747]  a Congressional intention to preclude (or not) a waiver of judicial remedies for the statutory rights under the Code."). The key question, therefore, is whether there is an inherent conflict between arbitration and the underlying purposes of the Code in relation to the particular dispute for which a party seeks to enforce an arbitration clause. See McMahon, 482 U.S. at 227.

“It should be apparent that if there is an inherent conflict between arbitration and the purposes of the Bankruptcy Code, then it is not relevant whether the dispute is core or non-core. Yet courts, and in this case, the parties, have focused on this question. See In re Anderson, 884 F.3d 382, 387 (2d Cir. 2018) ("[T]he specific question posed in this case ... whether arbitration may be compelled in this bankruptcy proceeding ... requires the bankruptcy court to determine first whether the issue involves a 'core' or 'non-core' proceeding[.]"); In re Thorpe Insulation Co., 671 F.3d 1011, 1020 (9th Cir. 2012) ("Several of our sister circuits that have addressed the issue have considered, as a threshold matter, a distinction between core and non-core proceedings.").”

Conclusion: Talk to legal counsel to determine whether the claim can be arbitrated.

The Ultimate Guide to Filing a Proof of Claim

Additional Issues Regarding Proofs of Claim

Follow our journey of revamping the PACER Case Locator in our latest article. Dive into our focus on enhancing the user experience by simplifying the interface, making searches more affordable, and connecting relevant actions.

Navigating bankruptcy records should feel seamless. However, the outdated and intricate PACER system remains an unavoidable hurdle. Its limited interface and bloated navigation make searching for cases less than delightful.


In this article, we recap how we gave the Case Locator a makeover. Our focus was on simplifying the user interface, streamlining workflows, and bolstering search capabilities. Through our adjustments, we've improved the experience.

The Court makes it expensive to search for cases. Searches start at $0.10, and accessing a single document can cost $3.00. Considering that many BankruptcyWatch users run thousands of searches daily, these expenses accumulate rapidly. As we designed our PACER makeover, our top goal was leveraging our powerful API and live copy of the court’s database to make searches more affordable.

Searching for case info on PACER takes you through 4 different pages on two different systems which sometimes requires dozens of clicks and multiple fields of data entry to get even basic info. Savvy PACER users keep multiple tabs to jump back to relevant search pages quickly. We wanted to streamline the search with one page to view the results quickly.

Much of PACER’s antiquated UI code was written over 20 years ago. As part of the makeover, we wanted the Case Locator to look like it was designed in this decade. We started by analyzing the page according to Nielson Norman’s 10 Usability Heuristics for User Interface Design. We built prototypes, surveyed current users, and went through several iterations of updates. Finally, we applied our company’s design system to make it fit seamlessly with the rest of our Platform.

Why stop at search? We wanted to make it simple to use the information from the results. To do this, we linked several quick actions for users to do with a relevant case:

Monitor the Case: Keep a tab on ongoing cases with just a single button click.

File a Claim: Streamline your process by filing a claim directly within the system using our smart form.

Docket Report: Pull the docket report and view each item for the case.

Claims Register: Pull the claims register and view each claim in the case.

Sell the Claim: Instantly sell a claim for the case.

Partner to File the Claim: Work with an experienced partner to file the Proof of Claim.

Possibly the most significant shortcoming of the Case Locator is its stagnant development. The last significant update to the Case Locator was several years ago, and the Case Locator is the most recent service to receive a major update. Embracing an iterative approach to enhancement is vital. To foster this, we've implemented logging mechanisms to monitor usage, introduced a feedback form for user insights, and set periodic meetings to gather continuous input. At BankruptcyWatch, we're committed to regular releases, ensuring constant improvement.

Want to try our improved Case Locator for free? Sign up for a free trial.

Extreme Makeover: How We Revamped the PACER Case Locator

Filing a mortgage proof of claim in bankruptcy proceedings in the United States can be a complex process. This guide aims to walk mortgage lenders and other interested parties through the steps and considerations involved. Key citations to the U.S. Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and official bankruptcy forms are provided for clarity and guidance.

When a debtor files for bankruptcy, creditors need to file a proof of claim to assert their rights to a share of the debtor's assets or future earnings. Filing a mortgage proof of claim involves specific procedures, governed by federal bankruptcy laws and local court rules. A proof of claim is essentially a formal declaration by a creditor stating the reason the debtor owes money.

To determine how your mortgage lien may be treated throughout a bankruptcy it is important to identify the legal classification of the lien.  This knowledge is very important when drafting and filing a proof of claim and so it is included below before discussing how to prepare and file a proof of claim.

1. Purchase Money Security Interests (PMSI)

A Purchase Money Security Interest is a form of lien that lenders secure when providing funds to purchase an asset. In the context of real estate, a PMSI typically takes the form of a mortgage that is used to buy the property.

Voluntary: PMSI arises from a contractual agreement between the lender and the borrower. The borrower willingly agrees to put up the property as collateral.

Specifically Defined: These liens are usually well-defined in terms of the property they cover, the duration, and the conditions under which they can be enforced.

Priority: One unique feature of a PMSI is that it often has priority over other types of liens, as it's directly associated with the acquisition of the property.

The concept of PMSI is particularly important under the Uniform Commercial Code (UCC), though state property laws also play a critical role. Always consult the terms of your specific loan agreement and local laws to understand the conditions related to a PMSI.

A Non-PMSI, on the other hand, refers to any lien or mortgage that is not directly involved in purchasing the property. These loans might include home equity lines of credit, second mortgages taken out for reasons other than the property’s purchase, or any other lien that attaches to the property post-acquisition.

 Judicial liens come into existence as the result of a court judgment. If a property owner is sued and loses, the court may place a lien on the property as a means to secure payment for the judgment.

Involuntary: Unlike a PMSI, judicial liens are not created through mutual agreement but are imposed by a court of law.

Non-Specific: Judicial liens do not necessarily have to be tied to the property that is the subject of the lawsuit; they can be attached to any property owned by the judgment debtor.

Enforceability: These liens usually result in forced sale of the property (foreclosure) if the judgment is not paid within a certain timeframe.

The Federal Rules of Civil Procedure and corresponding state laws define the processes by which judicial liens can be established and executed. The process generally starts with a judgment, followed by the issuance of a writ of execution, and culminates in the placement of a lien on property identified by the judgment creditor.

Statutory liens are established by statutes, or laws, rather than by a contract or judicial action. Common examples include tax liens, mechanic’s liens, and homeowner’s association (HOA) liens.

Automatic: Statutory liens generally attach automatically when certain conditions defined by law are met.

Involuntary: Like judicial liens, they are not based on a consensual contract.

Limited Scope: Statutory liens are often limited to specific types of property or specific circumstances.

Statutory liens are created by federal or state statutes. For example, tax liens are governed by federal law and are placed automatically when a taxpayer fails to pay their federal taxes.

Potential Effect of Bankruptcy On Mortgage Liens

In a Chapter 7 bankruptcy, the debtor's assets may be liquidated to pay off unsecured debts. While the automatic stay prevents immediate foreclosure, the mortgage lien is not extinguished unless specific action is taken to void the lien. Once the bankruptcy case is closed, the property securing the lien is abandoned by the chapter 7 trustee, and the automatic stay is lifted, the creditor is free to pursue foreclosure if the debtor has not made good on their mortgage payments (See 11 U.S.C. § 362(c)).

If the lien is not voided in the Chapter 7 bankruptcy, the discharge does not deprive a mortgagee of its right to collect its debt in rem. 11 U.S.C. § 524(a)(2) (2023) ("A discharge . . . operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor.") (emphasis added); Johnson v. Home State Bank, 501 U.S. 78, 84, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991) ("[A] bankruptcy discharge extinguishes only one mode of enforcing a claim—namely, an action against the debtor in personam—while leaving intact another—namely, an action against the debtor in rem."). Instead, "a creditor's right to foreclose on the mortgage survives or passes through the bankruptcy." Johnson, 501 U.S. at 83.

Priority: These liens usually have priority over other types of liens.

Protection: Under 11 U.S.C. § 522(f), it is usually not possible to "avoid" a PMSI in Chapter 7.

Options: Debtors usually must continue making payments if they want to keep the property, or they may choose to surrender the property.

Subordination: They usually take a back seat to PMSIs.

Cramdowns and Strip-Downs: Not typically available in Chapter 7 (but can be more prevalent in Chapter 13).

Surrender or Reaffirmation: Options include surrendering the property or reaffirming the debt to keep the property.

Avoidance: Under 11 U.S.C. § 522(f), debtors can often move to "avoid" judicial liens to the extent that they impair an allowed exemption.

Dischargeability: The underlying debt may be dischargeable, but the lien remains until actively avoided.

Variability: Treatment can vary widely depending on the type of statutory lien and the relevant state and federal laws.

Survival: Some statutory liens, like certain tax liens, can survive bankruptcy and still need to be paid.

Critical sections of the U.S. Bankruptcy Code for Chapter 13 cases are:

11 U.S.C. § 1322: This outlines the requirements for a Chapter 13 plan, including the treatment of secured claims.

11 U.S.C. § 1325: This describes the conditions under which a Chapter 13 plan may be confirmed.

Anti-Modification Clause: Per 11 U.S.C. § 1322(b)(2), PMSIs on a debtor’s principal residence generally cannot be modified ("crammed down") in Chapter 13.

Exceptions to the Anti-Modification Clause
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Arrearages: Debtors can catch up on missed mortgage payments over the life of the Chapter 13 plan. See 11 U.S.C. § 1322(b)(5).  

Cramdown or Avoidance Similar to PMSIs,  Non-PMSIs are more commonly subject to the exceptions to the anti-modification provision discussed above.  

Lien Stripping: Under 11 U.S.C. § 1322(b), judicial liens can often be stripped off if they impair an exemption.

Dischargeability: Once stripped, the underlying debt can often be discharged.

Variability: Treatment varies widely depending on the statute under which the lien was created.

Priority Payment: Certain statutory liens, like tax liens, often must be paid in full through the Chapter 13 plan.

A "proof of claim" is a written statement setting forth a creditor's claim. A claim is a right to payment, either fixed, unliquidated, secured, or unsecured (11 U.S.C. § 101(5)).

The Bankruptcy Code stipulates that failing to file a proof of claim may result in the creditor's claim not being allowed, thereby forfeiting the creditor's rights to any distribution in the bankruptcy case (11 U.S.C. § 502). 

Upon the debtor filing for bankruptcy, an "automatic stay" is usually imposed under 11 U.S.C. § 362. The automatic stay prevents most creditors from taking collection actions against the debtor. While the stay is in effect, creditors must assert their claims within the bankruptcy process itself.

The deadline for filing a proof of claim varies depending on the type of bankruptcy case, but it is generally 70 days after the bankruptcy filing date for non-governmental creditors. This deadline may be subject to extension under specific conditions (Federal Rule of Bankruptcy Procedure 3002(c)).

Step-by-Step Guide to Filing a Mortgage Proof of Claim

Step 1: Acquaint Yourself With Applicable Forms

Official Bankruptcy Form 410: Form 410 is the official form used to file a proof of claim. This form requires you to provide information about the debtor, creditor, and the claim itself.

Form 410A: For creditors with a mortgage claim, Form 410A (Mortgage Proof of Claim Attachment) serves as an additional, necessary attachment. This form provides more detailed information specific to mortgage claims.

Step 2: Complete Official Bankruptcy Form 410

Name of Debtor: Usually the individual or entity that has filed for bankruptcy.

Case Number: This is assigned by the bankruptcy court and is crucial for document tracking.

Name of Creditor: This is where you list the name of the lender or entity asserting the mortgage claim.

Mailing Address: The address where any correspondence related to the claim should be sent.

Amount of Claim: Here, you'll specify the amount owed as of the bankruptcy filing date.

Basis for Claim: This is where you'll specify that the claim is based on a mortgage.

Last Four Digits of Any Number: Typically, the account number or loan number tied to the mortgage, for identification purposes.

Type of Claim: Whether the claim is secured or unsecured. A mortgage is generally a secured claim.

Supporting Documentation: You should attach all relevant documents that support your claim, such as mortgage agreements and payment histories.

Form 410A requires additional mortgage-specific information:

Principal and Interest: Breakdown of the outstanding principal and any accrued interest.

Additional Fees: Late fees, penalties, and other charges must be itemized.

Escrow Account: Information regarding any escrow accounts for property taxes, insurance, etc.

Mortgage Note: This is the original agreement and serves as the basis of your claim.

Statement of Account: This is an itemized statement showing the calculation of the claim amount.

Evidence of Perfected Security Interest: Documents proving that the mortgage lien is properly recorded and thus enforceable.

One POC form to rule them all

The Bankruptcy Proof of Claim

Explore POC examples

Streamline your POC process with our bankruptcy response tools

A Comprehensive Guide to Filing a Mortgage Proof of Claim

Explore real examples of the bankruptcy Proof of Claim (Official Form 410). Free PDF examples include different Chapters, creditors, and types of debt.

The Proof of Claim (Official Form 410) is important for creditors to assert their claims on debts. This form's complexity can be daunting for both newcomers and seasoned professionals, making visual examples invaluable. Examining real-life samples of the form, like those available in the linked PDFs below, can offer insights into its structure, showcase varied scenarios like different types of debts and bankruptcy chapters, and significantly reduce errors by providing a tangible reference. 

Filed - Priority Unsecured (Child Support) - Office of Recovery Services - View

Filed- Secured (Lease) - Quantum3 Group LLC as agent for Katapult Group LLC - View

Filed - Secured (Mortgage) - Nationstar - View

Filed - Unsecured (Medical) - Ankle & Foot Centers of Georgia - View

Filed - Unsecured (Revolving Credit) - Wells Fargo - View

Filed - Unsecured (Student Loan) - US Department of Education c/o Nelnet - View

Amended - Secured (Auto) - Motolease - View

The Bankruptcy Proof of Claim (With Pictures)

Automate Proof of Claim filing with our PACER API

Announcing Platform claims filing: one form to rule them all

The Ultimate Guide to Filing Proof of Claims

Examples of Bankruptcy Proof of Claims

In this article, we'll break down the steps involved in filing a bankruptcy proof of claim, referencing relevant sections of the Bankruptcy Code and Bankruptcy Rule to provide a clear and comprehensive guide.

Filing for bankruptcy can be a complex and daunting process, both for debtors seeking financial relief and creditors looking to protect their interests. One critical step for creditors is filing a proof of claim, which allows them to assert their right to a share of the debtor's available assets. In this article, we'll break down the steps involved in filing a bankruptcy proof of claim, referencing relevant sections of the Bankruptcy Code and Bankruptcy Rule to provide a clear and comprehensive guide.

When a debtor files for bankruptcy, it initiates a legal proceeding where creditors are required to submit their claims to the bankruptcy court. This ensures that the debtor's assets are distributed fairly among all eligible creditors. The process is governed by the United States Bankruptcy Code, Title 11 of the United States Code, and the Federal Rules of Bankruptcy Procedure.

"Claim" in bankruptcy is defined as: (A) a right to payment, whether or not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (B) a right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.

Bankruptcy Code Section 101(5) defines a claim.

Before you begin the process of filing a proof of claim, it's essential to gather all relevant information. This includes the debtor's name, case number, and the type of bankruptcy proceeding (Chapter 7, Chapter 11, Chapter 13, etc.). You should also have documentation to support your claim, such as invoices, contracts, promissory notes, or other evidence of the debt owed.

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