By Ryan C. Wood

If you filed a bankruptcy case under Chapter 13 of the Bankruptcy Code creditors should file proof of their claims in your case.  Creditors may also file proof of claims in Chapter 7, 11, and 12 cases, but this article is limited to Chapter 13 bankruptcy cases.  Chapter 13 is the most common chapter a creditor will be filing a proof of claim in given chapter 13 is limited to people filing for protection.  A corporation or limited liability company cannot file for protection under chapter 13.  A proof of claim is exactly as it sounds – it is a written statement setting forth the creditor’s claim. See Federal Rules of Bankruptcy Procedure (“FRBP”) Rule 3001(a).  In order to receive any payments through the Chapter 13 Plan a creditor will need to file a proof of claim.  Filing a proof of claim does not mean the creditor automatically receives a payment from the bankruptcy estate.  The proof of claim can be objected to or be disallowed.  If the proof of claim is valid the creditor may receive a payment from the bankruptcy estate, but the percentage received through the plan will be based on each individual case.  Here are some things to look for if there is a proof of claim filed in your bankruptcy case.

Was the Claim Filed on Time?

When a claim is filed in your case, you need to review whether the claim was filed on time.  Creditors have up to 90 days after the first date set for the meeting of creditors to file a timely a claim.  Government units have a longer period of time to file a claim, normally up to 180 days after the bankruptcy petition was filed.  As with all rules, there are exceptions that apply.  For more detailed information I would highly advise that you speak with a bankruptcy attorney in your jurisdiction.

Is the Proof of Claim Valid?

Under FRBP 3001(c), the proof of claim needs to provide supporting documentation to back up the claim in order to be valid.  If the claim is based on a writing the creditor needs to file the original or a copy of the writing along with the claim.  If the writing is not provided there should be a statement about the circumstances regarding why the original or a copy cannot be provided.

In addition, if the amount of claim includes interest, fees, expenses or other charges, a statement needs to be included that itemizes all the additional charges or expenses.  If a creditor is filing a proof of claim for a security interest regarding property you own, the creditor needs to include evidence that the security interest was perfected against the property (such as a lien recorded against your property filed with the county recorder’s office).

Is the Proof of Claim Filed a Duplicate?

Sometimes different creditors file separate proof of claims for the same debt (this can happen with the debt was sold a collection agency).  You need to review the claims carefully to be sure there is only one creditor for each underlying debt.

Objecting to Proof of Claims

So what happens if the claim was not filed within the allotted period, if the claim is a duplicate or the claim is not a valid claim?  The Supreme Court of the United States held that it was okay for creditors to file claims in bankruptcy cases even though the statute of limitations has run on the enforceability of the claim under applicable state law.  SCOTUS held that because the chapter 13 trustee’s office should or would object to that claim a debtor does not have a claim for damages against the creditor under the Fair Debt Collection Practices Act.  Well, in your jurisdiction you chapter 13 trustee may not object to claims so it is on the debtor and their bankruptcy attorney to have expend the time and money to object to bad or improper claims.  Here in the Northern District of California there are chapter 13 trustees that have never objected to a claim filed by a creditor.  Also here in the Northern District of California our no look fees for objecting to a claim are only $400.  If there is even he slightest fight regarding objecting to the claim let alone an evidentiary hearing $400 is not even close to reasonable and and necessary compensation. 

You can file an objection to the proof of claim.  The judge may agree with you and disallow the proof of claim or they could still allow the proof of claim if the creditor has a reasonable explanation that the judge will accept.

The issues listed above are not the only objections to proof of claims available to you.  If you do not agree with some of the claims that are being filed in your case you should seek the advice of an experienced bankruptcy attorney.