Tardy Chapter 13 Claim Allowed
This case allowed a Tardy Chapter 13 Claim. Â In every Chapter 13 bankruptcy, the court establishes a deadline for creditors to file a proof of claim. Creditors are advised of the last date to file a proof of claim in the initial notice of debtor’s filing for bankruptcy that is sent out by the court to all creditors identified in debtor’s bankruptcy schedules.
In this case, it was undisputed that creditor received notice from the bankruptcy court of the final date on which it could file a Chapter 13 proof of claim. Notwithstanding the deadline set by the court, creditor did not file a proof of claim until approximately four months later.
The issue before this court was whether a proof of claim filed in a Chapter 13 case after the ninety day deadline set by the court may be allowed for distribution purposes.
This court, as well as many other courts around the country, have disallowed tardy claims solely on the ground of the lateness of the claim. Here, however, the court reconsidered whether a late claim may be permitted under certain circumstances and noted that the Bankruptcy Code contemplates creditors filing late claims and, in this case, debtor’s Chapter 13 plan did not provide for repayment on late claims.
Consequently, since debtor’s only objection to the claim was solely due to the fact that it was filed late, the court allowed this claim. In re Sullins, 161 B.R. 957.
EDITOR’S COMMENT
In the case reported above, the court noted that recent developments in the area of late Chapter 13 claims prompt the court to consider allowing late claims.
Although many courts, including the same court that rendered the decision above, have not allowed late claims, this decision may cause other courts to allow late claims filed by creditors.
If your credit union, for whatever reason, did not file a timely Chapter 13 claim, it may be worth the credit union’s effort to file a late claim and seek allowance of the same so that the credit union may share in distribution of the debtor’s proceeds.
Author: Charles R. Harroun, Attorney at Law