Does Every Creditor File a Proof of Claim for Chapter 13?

By Tom Streissguth

A Chapter 13 bankruptcy allows a burdened debtor to escape collection actions and lawsuits brought by creditors. A court trustee sets up a repayment plan in which the debtor repays a percentage of his outstanding debts to all creditors who have filed a Proof of Claim form. Important rules in the bankruptcy code govern who needs to file a Proof of Claim to obtain repayment from the debtor.

A Chapter 13 bankruptcy allows a burdened debtor to escape collection actions and lawsuits brought by creditors. A court trustee sets up a repayment plan in which the debtor repays a percentage of his outstanding debts to all creditors who have filed a Proof of Claim form. Important rules in the bankruptcy code govern who needs to file a Proof of Claim to obtain repayment from the debtor.

Overview

Chapter 13 bankruptcy gives a debtor a chance to repay a portion of his unsecured debts and then have the court cancel the remaining balance. A court trustee collects monthly payments from the debtor and pays the creditors based on the repayment plan. If the debtor falls behind or stops payments, the case is dismissed or converted to a Chapter 7, in which a trustee seizes non-exempt property and sells it to repay the creditors.

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Proof of Claim

When filing for Chapter 13 bankruptcy, the debtor must fill out schedules that list all of his debts. Unsecured debts, such as credit card accounts and medical bills, are not secured by property. Secured debts allow the lender to seize property (such as a car) that has been pledged by the borrower against default. The court notifies all listed creditors using information provided by the debtor. The creditors have 30 days from notification to file a Proof of Claim. This document asserts their right to repayment according to the trustee's schedule. "Creditor" and "claim" are defined in 11 USC §101 of the federal bankruptcy code. Filing procedures and deadlines are covered in 11 USC §501.

Filing Requirements

To be included in the repayment plan, all creditors must file a Proof of Claim. This includes private lenders as well as public entities such as the Internal Revenue Service, and state and local agencies. If a creditor fails to file a timely Proof of Claim, then the claim will be disallowed. Exceptions are made if the debtor failed to list the creditor in the initial petition, and in this case, the court will require amended schedules from the debtor and proper notification to the creditor. This may happen at any time before the repayment plan is complete and the court grants a discharge.

Forms and Schedules

Debtors filing for bankruptcy list their secured debts on Schedule D, unsecured "non-priority" debts on Schedule F and unsecured "priority" debts on Schedule E. (Priority debts are those which the bankruptcy law will not allow you to discharge and must be paid in full.) The Proof of Claim form filed by creditors is known simply as a "B10." All forms and schedules are available online from the USCourts.gov website. Forms can be filled out online and then printed out for signature and filing.

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What Happens If I Forgot to List All My Bills for My Chapter 13 Bankruptcy?

References

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How to File an Objection in a Bankruptcy Case

Bankruptcy is a legal process intended to give debtors a fresh financial start. When an individual files bankruptcy, creditors have opportunity to present proof of claim of money owed to them. The bankruptcy trustee and the debtor and creditors either settle the claims with the assets available, or present them for litigation before the bankruptcy court. Once the claims are resolved, the court discharges all remaining debts and the debtor can start anew.

Local Bankruptcy Rules for Montana

Montana debtors in financial trouble may file for bankruptcy protection under Chapter 7 or Chapter 13 of the federal bankruptcy code. In a Chapter 7 case, a court-appointed trustee seizes assets and sells them in order to repay creditors. In a Chapter 13, the trustee prepares a repayment schedule, which allows the debtor to repay a portion of his debt over several years. Montana has its own set of rules that guide bankruptcy cases filed in the state.

How to Put a Car in a Chapter 13 Plan

When you file a Chapter 13 bankruptcy petition, you are asking for a court-ordered stay of any collection action by your creditors, whether they're holding secured or unsecured loans. A court-appointed trustee draws up a repayment plan, which allows you to pay down a portion of the outstanding debts and then see them discharged by the court at the end of the plan. If you have taken out a car loan, the law allows you to pay the loan separately or include it in the repayment plan.

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