A publication for Credit and Finance Professionals
Proof of Claim
Proof of claim - is not just a term connected with a Creditor’s responsibility when filing a claim against a bankrupt debtor.
Whether your customer is bankrupt or just avoiding their just obligation in order to buy time, you (the Creditor) must realize that you have a true obligation. I can assure you, as a Collection Agency’s Principle and having submitted literally thousands of cases to courts across the country, that the requirement of “proving up” the Creditor’s claim is as much a necessity to collection success as having a claim to begin with. This is a fact I have grown to appreciate all too well.
We have seen claims summarily thrown out of court for lack of documentation (even partially proven claims will not suffice). It can be even more injurious when the possibility of the Creditor being counter-sued becomes a real possibility. This reality can become more than unpleasant (and quite unnecessary) for a Creditor who began the collection process with a just obligation that could not be held to immutable scrutiny.
So to avoid wasting a lot of time and perhaps placing your receivables in needless jeopardy, here are a few helpful hints to remember:
Before pursuing any debt, remember that you have an obligation to “prove up” when called upon by your customer. Do it before you are required to do so.
Do not authorize litigation without complete documentation of the debt. You will be required to do so anyway.
As much as this may seem distasteful based upon a debtor’s treatment of you or your company, debtor’s have rights too. Unfortunately your obligation is not mitigated simply by a debtor’s poor or inattentive behavior.
The last thing you want is a successful counter claim by a debtor! Challenges made by the debtor to your claim should be given as much consideration in your documentation as your supported position. Here in lies the basis for legal counter-actions and possible loss of your entire debt.
