7 Things to Do If a Creditor Does Not File a Proof of Claim

In most Chapter 13 Las Vegas bankruptcies, the creditors file their proofs of claim when they are informed that the debtor has filed bankruptcy, and there are no hiccups. Most Chapter 7 bankruptcies don’t require them to file proofs of claim because the creditors often receive nothing from the bankruptcy estate. In Chapter 13, though, they want to receive payments from the repayment plan, so they have an incentive to file, for if they don’t, they get nothing. In some instances, it’s actually worthwhile for the debtor to file the proof of claim on the creditor’s behalf anyway. Here’s why and what to do.

  1. The bankruptcy rules require creditors to file the proofs of claim within certain time periods. In most cases it’s due 90 days after the 341 meeting of the creditors, though there are exceptions like if the claim arises from a judgment.
  2. If a creditor misses the deadline, Rule 3004¬†authorizes the debtor or the trustee to file the claim on the creditor’s behalf within 30 days of the deadline.
  3. If either chooses to file the claim, the clerk of the bankruptcy court is required to give notice to the parties.
  4. Sometimes creditors choose not to file proofs of claim because they know they will get next to nothing out of the repayment plan. If the debtor owes back taxes, student loans, etc. then there’s a good chance that an unsecured creditor will get nothing, so by not filing a proof of claim, it’s essentially giving up and moving on.
  5. In other situations, though, the debtor may be dealing with one or more creditors whose claims are nondischargeable but who choose not to file proofs of claim nonetheless. They will be paid either way, so they may choose not to bother with the bankruptcy process. The result is that after the estate is closed, the debtor is stuck with large liabilities after bankruptcy. Thus, the bankruptcy rules allow the debtor or the trustee to file the claim for the creditor because disallowing it would punish the debtor unfairly.
  6. If the debtor files the claim, the trustee can gather supplemental evidence to ensure the amounts owed are correct.
  7. If the creditor objects to any aspect of the proof of claim, it is free to file a motion with the bankruptcy court to have the court adjudicate any dispute.

It doesn’t happen often that a creditor is a no-show to a bankruptcy, but there are situations in which its presence is necessary. Rule 3004 allows the debtor to resolve this problem.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.

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