Importance of a timely proof of claim

By Marrero, Chamizo, Marcer Law, LP,

Florida residents may be interested in a Chapter 13 bankruptcy case involving a creditor with a lien on a debtor’s property due to unpaid property taxes. The creditor was denied the ability to collect as part of the bankruptcy claim due to specific filing rules on filing a proof of claim for Chapter 13 cases.

According to case records, the creditor was barred from being included in the bankruptcy disbursement because they did not file a proof of claim by the allotted deadline. Although secured creditors are not required to file a proof of claim in order to collect, they may still need to file in order to be included in a bankruptcy. This gave the debtors the option to file on the creditor’s behalf or wait until after the conclusion of the bankruptcy to pay them off.

The choice of whether to include the creditor despite their non-filing was an important legal decision. In Chapter 13 bankruptcy cases, the debtor enters into a repayment plan using future income to satisfy all debts included. At the end of a specific period, usually three to five years, most remaining unpaid debt is automatically discharged so long as all required payments have been made. By not including a creditor, the debtor may be able to negotiate a lower payment under their plan, but they may miss the potential for some of the debt to be discharged.

There are many factors to consider when negotiating a Chapter 7 or Chapter 13 bankruptcy case. A skilled Bankruptcy Attorney can help a client understand the bankruptcy process and their obligations. Certain debts may not be discharged even after the bankruptcy concludes, and if certain creditors are not included in the bankruptcy, they may still have the right to pursue collection. It is important to gain a full understanding of the process and its effects so that the bankruptcy becomes a satisfactory debt solution.