Written by attorney Nathan Steven Graham


In Chapter 13 bankruptcy, debtors prepare a plan to repay their creditors. Creditors have an opportunity to review the plan, and if they feel they are being treated unfairly, they can file an objection to the plan. Once all objections are resolved, and the plan is confirmed by the Court, the creditors are bound by the plan and will receive full, partial, or no repayment as indicated in the plan.

However, debtors cannot stop paying attention to creditors claims after confirmation. In Chapter 13 bankruptcy, only “allowed" claims receive payment by the Trustee in Chapter 13 plans. Claims become allowed claims when creditors (or debtors) file a proof of claim, which is a document that describes the claim and supports it with documentation. Debtors need to be aware of whether secured creditors who are being provided repayment in a Chapter 13 plan file a proof of claim. If a creditor does not file a timely proof of claim, then the claim will not be paid in the Chapter 13 plan. If repayment of a creditors claim is provided for in a Chapter 13 plan, but is not being paid because the claim is not allowed, then the creditor can file a Motion with the Court to lift the automatic stay and repossess the secured property. The creditor can do this because their claim is not being paid according to the terms set forth in the plan.

It may seem unfair that a creditor’s failure to act can so adversely affect the success of a debtors Chapter 13 bankruptcy case, but The Bankruptcy Code provides a mechanism for preventing this from happening. Debtors are allowed to file a proof of claim on behalf of the creditors during the thirty day period following the expiration of the creditors deadline to file a proof of claim. This allows debtors a way to ensure that secured creditors provided for in a Chapter 13 plan receive payment.

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