How to Dispute a Preference Claim in Bankruptcy
- 1). Review all proof of claim forms submitted in your bankruptcy case. Proof of claim forms are submitted by creditors to the bankruptcy court. Through a proof of claim, a creditor notifies the bankruptcy court of the amount of money claimed to be due from the debtor.
- 2). Determine if any creditor is making a preferred claim or contending that its account is not subject to discharge. A typical preferred claim is a home mortgage loan. The preference in such a claim is the lender's ability to have real estate set aside for its own interests in a bankruptcy case because of the lien it maintains on the property. Occasionally, a lender states that it has a preferential claim because of a contract it entered in with you or by operation of law.
- 3). Identify any creditor that contends a preferential claim because of an agreement of operation of law. If you have no knowledge of such a preference and believe the claim to be false, notify the bankruptcy court trustee in writing of your position before the creditors' meeting. The bankruptcy court trustee is the official who oversees your case on a day to day basis. The creditors' meeting is the session where creditors and the debtor come together to discuss matters relating to the case.
- 4). Appear at the creditors' meeting and present any documentation or other evidence to the bankruptcy court trustee supporting your opposition to a claimed preference made by a creditor. If the bankruptcy court trustee agrees with your position, the preferential claim is amended to a standard claim on equal footing with most of your other creditors.
- 5). File an adversary complaint if the bankruptcy court trustee rules against you. The bankruptcy court clerk has a standard form to initial an adversary proceeding. An adversary proceeding essentially is a trial within the confines of the bankruptcy case generally. You appear before the judge with the creditor to argue your positions and present evidence as to the nature of the creditor's claim. The judge issues a ruling either for or against you following the hearing.