Proof of Claims Bar Date
When a client of The Sellers Law Firm files a Chapter 13 or Chapter 7 bankruptcy with their Montgomery bankruptcy lawyer the client or petitioner must list all their debts in the petition for bankruptcy. These debts are scheduled according to the type as either secured or unsecured. Secured debt is debt that has a perfected lien of some kind on property of the petitioner be it real property such as land, titled property like cars or mobile homes, or property listed as collateral to secure the monies loaned. Unsecured debts are broken into categories which can include credit cards, personal loans, and open charge accounts. Debt listed in a petition for bankruptcy is scheduled, or listed, at the time the petition is filed. Included in the scheduled debt will be details containing the name and address of the creditor to whom the client owes money, the amount of the debt, account number, date when the debt was first acquired, and the category of the debt.
Once the petition is filed with the United State Federal Bankruptcy Court then the creditor must file a poof of claim. A creditor’s deadline for filing a proof of claim is called the bar date, because after that date any proof of claim is barred from being paid. The bankruptcy bar date requirements are found in the Federal Rules of Bankruptcy Procedure Rule 3002. This rule states that the bar date for a non-governmental unsecured creditor in a Chapter 7 liquidation or a Chapter 13 reorganization is 70 days after the petitioner files their petition for bankruptcy. A non-governmental secured entity is given 100 days to file a proof of claim. Governmental entities, of course, have additional time to file a proof of claim. A government agency is given 180 days after the petitioner files their petition for bankruptcy protection in order to file a proof of claim. Creditors are informed of the claims bar date by the first notice from the Court that a petitioner has filed for bankruptcy protections.
It is the duty of a petitioner’s attorney to review all proof of claims filed. Of course, the staff of the Sellers Law Firm, your Montgomery bankruptcy attorney, ensures that proof of claims filed in their bankruptcy cases meet all legal requirements. Checking to see that the proof of claim bar date has not passed is just one of the many situations that we review on proofs of claims. If the creditor files a proof of claim after the bar date, then we will object to the claim, and if the Court agrees with our objection then the claim will be disallowed, and the creditor cannot be paid through the bankruptcy. There is one very important exception to a bar date violation having to do with secured claims.
Remember that a secured claim is a claim with a perfected lien on property belonging to a petitioner. A perfected lien can be a properly recorded mortgage, having a lienholder appear on a title document such as a car’s title, or pledged property owned by a petitioner for a collateral loan. The exception states that a secured creditor who fails to file a timely proof of claim will continue to have their lien on the petitioner’s property. This exception means that a secured creditor could still exercise legal rights on the property for which they hold a perfected lien.
The other major exception found in this rule has to do with the difference between a Chapter 7 and a Chapter 13 bankruptcy petition. One of the many reasons a Chapter 7 might be filed is because the petitioner has no assets to protect from their creditors. When these cases are filed the Court informs creditors in their initial notice of the filing for bankruptcy protections that the case is a no-asset case and no dividend is expected to be paid during the process of the bankruptcy case. Therefore, unsecured creditors are asked not to file a proof of claim. If the trustee discovers assets belonging to a petitioner that may be used to pay unsecured creditors, then the trustee must ask the clerk of court to notify creditors of a possible dividend. In this situation creditors are given at least 90 days’ notice as to the bar date for claims.
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The Sellers Law Firm is designated a debt relief agency by an Act of Congress and the President of the United States. We have proudly assisted people seeking relief under the U.S. Bankruptcy Code for three decades.