By Baran Bulkat , Attorney. If a bankruptcy creditor wants payment, it must file a form called a proof of claim with the court. But debtors are also allowed to file proofs of claim for creditors, and it can be in your best interest to do so. Read on to learn more about when to file a proof of claim for a creditor.
If a creditor doesn't file a proof of claim, it will not get paid in the bankruptcy. But creditors routinely fail to file proofs of claim in bankruptcy cases. The following are some of the most common reasons a creditor may not file a proof of claim in your bankruptcy:.
To learn more about what a creditor must include in a proof of claim, see What Is the Bankruptcy Proof of Claim? You should file a proof of claim for a creditor if you want to pay off a specific debt in your bankruptcy and the creditor did not file a claim in the time allowed by law discussed below. In most cases, a debtor will file a proof of claim for nondischargeable or secured debts they wish to pay off through their Chapter 13 repayment plan.
Nondischargeable debts. Lastly, in a chapter 11 case, the debtor will request that the bankruptcy court set the bar date and then serve a notice of the court-imposed deadline.
In chapter 11 cases, a creditor may not need to file a proof of claim if it agrees with the amount that the debtor listed as due to the creditor in its bankruptcy schedules and the debtor has not listed the debt as disputed, contingent, or unliquidated. For chapter 11 cases, the court will set a bar date. See Fed. Clearly, when a creditor first receives a notice of a bankruptcy filing or a subsequent notice setting the deadline for filing proofs of claim , it should carefully determine the deadline for filing the proof of claim.
If the creditor fails to timely file its proof of claim, the claim may be deemed invalid. Consulting bankruptcy counsel can be reassuring as to this critical step. In that chapter 7 case, the court set September 13, as the bar date. The apparently simple act of filing a claim can be complicated.
It is up to the Creditor or their representatives to carefully review these Notices to obtain these vital submission details. Certain cases may require a Creditor to submit their Proof of Claim to a third-party bankruptcy claims agent that has been retained by the Debtor and approved by the court to administer and process all claims in the case.
Notices from the case will specify the address to which the Proof of Claim documentation should be sent, and if regular mail services or an overnight courier services are accepted. In the majority of cases, it is not permitted to file Proof of Claims documents via fax or email.
In some cases, the court may provide Creditors with the option to submit their Proof of Claims electronically. Instructions for electronic submission are provided online. By far, the most convenient way to submit a Proof of Claim is to file it electronically on the designated website of the Bankruptcy Court, or its contracted bankruptcy Claims Agent.
A Creditor can easily and efficiently submit an electronic Proof of Claim online through the appropriate website for the relevant bankruptcy court for the case. This option does not require a login or password.
It also makes it simple to attach and upload all supporting documentation with the digital Proof of Claim form. Filing electronically has the advantage of being immediately recognized in the bankruptcy case. Creditors can print or save their progress electronically to access the claim later, and can also receive submission confirmation. The process of filing an electronic Proof of Claim will include answering a series of pertinent questions to help a Creditor submit the Proof of Claim accurately and efficiently.
The last possible date that Creditors are allowed to file their Proof of Claim against a Debtor in a bankruptcy case is known as the Bar Date. This is effectively the deadline for Creditors to adhere to the bankruptcy claims timeframe through timely submissions of Proof of Claim to be accepted by the court. This same Notice will include the Proof of Claim form and instructions for how to properly fill it out and submit it.
Most Proof of Claim forms that are filed after the Bar Date are rejected and not given any consideration by the Court. Under very rare circumstances, a Creditor that is delinquent in submitting a Proof of Claim prior to the Bar Date, can have their late Proof of Claim reviewed and accepted. In the event that a Creditor fails to file the Proof of Claim form by the Bar Date, the Creditor will need to convince the Bankruptcy Court that there is a legitimate reason for filing late and missing the bankruptcy claims timeframe.
However, it will be up to the Creditor to prove the reasoning with the court. Ignorance of the law or to use the excuse that the Bankruptcy Notice was never received are insufficient reasons that the court will not accept.
The following is a list of the four considerations that a Court will evaluate in determining whether to excuse a late Proof of Claim filing, according to a Supreme Court decision made in Under extenuating circumstances, there is the possibility for a Creditor to file a late Proof of Claim to be accepted by the court.
However, the stringent criteria and subsequent dealings with the court to excuse the failure to meet the Bar Date can make it a burdensome process. The following is a list of the important details a Creditor will need to have ready in order to complete a Proof of Claim form in a bankruptcy case.
An essential aspect in filing the Proof of Claim is to determine whether a bankruptcy claim falls into one of two classifications: Secured or Unsecured. What is the difference? Under 11 U. The classification of secured claims are given priority in the bankruptcy claims process, meaning they have the right to be paid from the available funds or bankruptcy estate before other Creditor classes are paid out i.
The only exception is government bodies, which have days. The exact procedure for objecting varies, but your Chapter 13 bankruptcy attorney can assist you through the process. Generally, your attorney will file an objection, along with substantiating paperwork, and if the creditor disputes the objection, your attorney will attend a hearing to dispute a claim. Sometimes, one or more creditors fail to file a proof of claim within the time limit. These creditors will receive payments through your Chapter 13 repayment plan.
Creditors that fail to file a claim will not receive any money. In some cases, this can create problems for you after your bankruptcy is over. In certain situations, you should file a proof of claim on behalf of your creditor s if they miss the deadline. However, depending on the type of debt you owe, you may not have to do anything.
Common types of debt you might owe a creditor include:. The benefits of bankruptcy include the ability to get rid of some of your burdensome debt and more effectively manage what remains.
However, if a creditor fails to file a proof of claim, you could still face financial difficulties after your discharge. Therefore, it is important to monitor all reports during the bankruptcy process and address any proof of claim issues promptly. We can advise you on filing a proof of claim for your creditors and assist in doing so.
For more information about Chapter 13 bankruptcy, contact our law firm today for a free initial consultation. If you have a question about a credit card payment, please call our Office Manager at
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