When do you Object to a Proof of Claim Filed by a Creditor in your Chapter 13?

A creditor that wants to get paid in your bankruptcy case must file a proof of claim with the clerk’s office of the Bankruptcy Court.  Most creditors must file their claim within a certain amount of time, typically 120 days from the date you filed your Bankruptcy petition.  Governmental entities, such as the IRS or the State of Alabama, are given additional time or 180 days from your petition filing date to file a claim.  It is extremely important to hire a competent lawyer who will review each and every claim that is filed in your case.  The reason is if the creditor files an inaccurate or fraudulent claim, the Attorney needs to object to the claim and ask the court to disallow it.

There are multiple reasons your attorney may need to object to a proof of claim such as

1. The claim amount is incorrect (the amount is higher than the amount you told us you owe);
2. The claim is filed as secured or priority when in fact it is unsecured (a credit card, medical bill or other creditor claims they have security or collateral for their loan when in fact they do not);
3. The creditor filed secured, but did not attach the required supporting documentation proving the debt is secured (it may actually be secured, but they did not attach the proper documentation);
4. The claim is a duplicate of another claim filed for the same debt(they are trying to get paid double);
5. The claim is for a debt that is not your debt (you don't owe that particular creditor at all);
6. The claim was filed after the deadline to file claims has expired called the bar date(claim filed after 120 days or 180 days for governmental unit); or
7. The debt was filed by a debt buyer that has no contractual obligation with you and the debt is over 6 years old. (you have probably never heard of them because they bought your debt that is uncollectable in state court and therefore illegal to collect in Bankruptcy Court. This is also called a stale claim).

Each Bankruptcy Court typically has its own procedures for filing an objection to a proof of claim, but typically your attorney will file a written objection with the Court and explain why you think the creditor’s claim is incorrect or illegal and thus should disallowed or modified to a lower amount or classification.  The creditor is always notified of the objection and is allowed to respond in kind.  If they do so, the Judge may require you to appear and testify to the reason you believe the claim is incorrect or illegal or needs to be modified.  In the instance of the debt buyer (#7) filing a stale claim, your attorney may be able to actually sue the creditor back in the Bankruptcy for you and get you money in return.  This is called an adversary proceeding.

As you can see it is very important to choose a competent attorney to file your Bankruptcy.  You want to choose one who will be constantly vigilant in reviewing the claims filed in your case.  You certainly do not want to miss out in suing one of your creditors and receiving money yourself.  At Bond & Botes, we review every claim page by page for accuracy.  If you are struggling to pay credit cards, medical bills or personal loans, not to mention your mortgage and vehicle loans please call one of our conveniently located offices at Bond & Botes first and set up a private consultation with one of our experienced attorneys.

We will analyze your situation and help you make the best decision possible to help you navigate your financial problems.