Proof of Claim Deadlines are Very Strict
Below is an example of when a Debtor appealed and won a creditors 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 did not agree with the IRS’s Proof of Claim
- 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 their Bankruptcy Proof of Claim response, they 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 Order of the Bankruptcy Court was affirmed and claim was allowed.
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.
Appellant Court agreed with the Debtor and the IRS’ bankruptcy mistake of a $93,000 claim is not allowed.
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.
Proof of Claims: If you receive a notice indicating that someone who owes you money files bankruptcy, you should act immediately in a Chapter 13 Bankruptcy matter.
You may be listed as a creditor in the petition the debtor filed. However, if you do not file a Proof of Claim your debt will not be paid.
The bankruptcy notice you receive from the Court indicates the date that you must file your proof of claim. 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 great loss to you and a benefit to the Debtor.
If you receive a Bankruptcy Notice from the Court advising you that the person who owes you money filed bankruptcy, I suggest you call me immediately. I offer a free bankruptcy consultation.
Be sure you contact me immediately to avoid your claim being lost and you will never be able to collect on your debt.
Creditor Rights in Bankruptcy:
Creditors have rights too in bankruptcy. I represent both debtors and creditors in bankruptcy.
Bankruptcy is a specialized field and you should always hire a Board Certified Attorney to fight for your rights.