January 18, 2019

Why Would You Choose to File a Proof of Claim on Behalf of a Creditor in Your Chapter 13

When you file Chapter 13, you include in your schedules the names and addresses of all of your creditors.  The Clerk of Court then mails out a notice of your filing to those creditors along with a form called a Proof of Claim form.

Under the Federal Rules of Bankruptcy Procedure, your creditors must file their proofs of claim within 90 days after the first date set for the Section 341 first meeting of creditors.  Since 341 hearings are usually set about 30 days after you file, this means that, generally, creditors have about 4 months to file their claims.  The deadline for creditors to file claims is called the bar date.

What happens, however, if a creditor fails to file a proof of claim in your Chapter 13.  If the claim is an unsecured claim, like a credit card debt or a medical debt, that creditor does not get payments from the Chapter 13 trustee and when the final discharge order is issued, that unsecured creditor’s claim is discharged, or wiped out.  Assuming you provided a valid address, unsecured creditors who received notice but who do not file a proof of claim cannot come back and sue you post discharge.

Secured and priority creditors are a different story.

In the case of a secured creditor, like a mortgage company or a vehicle lender, the Chapter 13 discharge would wipe out your personal liability but the lender’s lien against the property remains valid.  Thus, your vehicle, house, furniture, jewelry or other secured debt could be repossessed or foreclosed post bankruptcy, although you would not have any personal liability for any deficiency claim. [Read more…]