Creditors need to file their Chapter 13 Bankruptcy Proof of Claims timely.
A question I often receive is: Should I tell creditors when I file a Chapter 13 bankruptcy? The answer is No. When a bankruptcy is filed, the bankruptcy court automatically sends creditors a Chapter 13 bankruptcy notice. Bankruptcy creditors have rights, too.
After a bankruptcy creditor receives the notice, they must file a Bankruptcy Proof of Claim. One way bankruptcy can negatively affect a creditor is by filing their proof of claim late. Even the IRS makes mistakes in bankruptcy.
Background:
- A creditor has 70 days from the Bankruptcy Petition Date to file a proof of Claim.
- The debtor provided an incorrect address for one of the Creditors.
- Although the incorrect address was provided, the Post Office was able to deliver the notice before the 70 days from the Petition.
- The Creditor came to the Meeting of Creditors, expressing her view on bankruptcy creditor rights.
- The Creditor had time to attend the Chapter 13 Bankruptcy Meeting of creditors but did not file a Proof of Claim.
- The Meeting of Creditors was delayed and rescheduled since the Debtor was not present and suggested the Creditor obtain Counsel.
- The Debtor showed up at the next Chapter 13 Bankruptcy Meeting of Creditors.
- The creditor claimed that she was unaware of the rescheduled date.
- The creditor files a proof of claim beyond the 70 days.
- Debtor and Chapter 13 Bankruptcy Trustee objected.
- The creditor states she should have been allowed to file a Proof of Claim as part of her bankruptcy creditor rights.
- Her reason to be able to file is that she was not allowed the “full 70 days” to prepare her Proof of Claim.
Court Ruling:
- The rules do not state that the creditor must receive notice for the full 70 days from the filing of the Petition.
- The Creditor admitted she received a notice, which the post office delivered to her on the 68th day. This is also evidenced by her appearance at the Meeting of Creditors.
- The Proof of Claim was not allowed.
- It is not clear why the Creditor decided to attend the Meeting of the Creditors but did not file the Proof of Claim in a timely manner.
- The creditor did not seek Counsel, as was suggested.
Late is Late – You cannot come to Court with an exception – there are very definite deadlines, and if you sit on your rights – you could lose. Counsel should have represented the Creditor in this Chapter 13 bankruptcy case. The advice given was not taken.
I represent creditors and debtors in Chapter 7, 11, and 13 Bankruptcy. Call me for a free consultation. Contact Me
