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.

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.

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.

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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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Can Creditors Sell Debt to a Collection Agency After Bankruptcy Has Been Filed?

References

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Chapter 7 Relief of Stay

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