A claim in bankruptcy refers to a claim made by a creditor to establish that they are entitled to a portion of the assets of an estate which filed bankruptcy.
Filing a claim in bankruptcy is necessary if a creditor wants to recover from the debtor. Nonetheless, just because a creditor files a claim in bankruptcy does not always mean they will be able to recover. For example, because debt to the government out prioritizes unsecured private debt, the liquidated bankrupt estate may run out of funds before a creditor is able to fully or partially recover.
The Department of Justice established claims in bankruptcy as:
- A right to payment, whether or not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or
- 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.
See also: 11 U.S.C. § 101(5)
[Last updated in August of 2022 by the Wex Definitions Team]