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Chapter 13 Bankruptcy Proof of Claims

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Chapter 13 Bankruptcy Proof of Claims

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Written and Verified by Ralph A. Ferro, Jr., Esq.

Chapter 13 Bankruptcy Proof of Claims

Protecting your rights in bankruptcy is essential.   When you file Chapter 13 Bankruptcy, creditors must file proof of claim in order to be paid in your bankruptcy.  if your creditor does not file a proof of claim, they will not be paid and you are no longer responsible for those debts.

Chapter 13 Bankruptcy Proof of Claims Tracking

When a Proof of Claim is filed by a creditor in my client’s bankruptcy, I review each claim to confirm as an example, the following:

  • The amount of debt is accurate.
  • The classification of the debt is correct – either secured or unsecured.
  • If the debt is not listed on the petition, I contact my clients to confirm this is a debt owed to a creditor.
  • Whether I need to object to the claim or work with the creditor to delete or modify the claim.

After the deadline passes that creditors can file a proof of claim, I prepare a detailed analysis which informs my clients of all the debts on the petition versus the creditors filed claims.

Accuracy in the proof of claims is important.   When you file a Chapter 13 Bankruptcy, you are paying back either a portion of your debts or all your debts over a 5-year period (with no interest).

If the proof of claims are not accurate, your Chapter 13 Plan payments could be affected.

Below is one example of when the IRS/Creditor’s claim was not paid – bankruptcy deadlines are stringent.

Creditor (IRS) late filing of a  Proof of Claim.

The IRS is held to the same standards as anyone else in bankruptcy.   If the IRS or any creditor is “Asleep at the Wheel”, they can lose and not be able to collect on their debt.   

  • IRS began collection efforts for penalties on a Debtor’s business for failing to pay $93,000 withholding taxes.
  • Shortly after the collection began, the Debtor filed bankruptcy.
  • IRS filed a Proof of Claim.
  • Debtor disagreed with the IRS’s Proof of Claim
  • The debtor filed an objection and sent a copy to the address on the Proof of Claim.

21 days passed, and the IRS sat on their rights and did not file a response.   The Bankruptcy Court sustained the objection (the objection that the Debtor filed) and disallowed the IRS’s Proof of Claim.  

Even though the IRS was late in filing its Bankruptcy Proof of Claim response, it moved to vacate the Order, disallowing its Proof of Claim.  The Bankruptcy Court agreed with the IRS and vacated the Order.

The Debtor’s attorney appealed to the District Court, and the Bankruptcy Court’s order was affirmed, allowing the claim.

The Debtor strongly disagreed with the Court’s ruling.   As a result, the Debtor’s bankruptcy lawyer appealed to the 8th Circuit Court of Appeals, and the matter was reversed and remanded.

Appellate Court agreed with the Debtor and that the IRS’ claim of $93,000 shall not be allowed and thus Debtor does not have to pay.

As you can see, the Debtor won.   It pays to appeal and fight for your debtor rights in Bankruptcy.  The IRS fell asleep at the wheel.    Deadlines work both ways – IRS must follow deadlines as all taxpayers must.

Creditors Rights in Bankruptcy

Creditors have rights too in bankruptcy.   I represent both debtors and creditors in bankruptcy.

What to do if you receive a notice that someone who owes you money filed a bankruptcy petition?

I suggest you call me immediately.

(201) 446-5904.    I offer a free bankruptcy consultation.    

You want to be sure your claim is listed in the petition, so I will file proof of claim for you.

Just because you were notified does not indicate that you will be paid the debt owed to you. You must take action. If you miss this date or sit on your rights, the person who owes you money will not be liable for the debt you are owed. 

That would be a significant loss to you and a benefit to the Debtor. 

Bankruptcy is a specialized field and you should always hire a Board Certified Bankruptcy Attorney to fight for your rights.

I am here to help you.  

Call me:    Ralph A. Ferro, Jr., Esq.  (201) 446-5904 

Board Certified Bankruptcy Attorney in Consumer Law