How to Respond to Creditor Objections & Motions in Bankruptcy

How to Handle the Creditor’s Claim

Each of the creditors that the consumer listed in his/her papers would be sent a notice by the trustee of the case. The creditors, if they wish to be paid, or lay a claim on a debt, must file that claim within the 90 days after the first creditors meeting.

*If the meeting is scheduled, the deadline for filing a claim still follows the first schedule, which is inside 90 days after the creditors meeting.

What if the consumer identified a certain creditor in his/her paper, but the creditor failed to file his/her claim?

The consumer is going to have to file (Proof of Claim) a claim in behalf of that said creditor. According to the Bankruptcy Rule 3004, the consumer only has 30 days (after the 90 day period of filing for the other creditors) to file Proof of Claim in behalf of the absent creditor. This filing is necessitated by the refusal of the trustee to pay the said creditor via the consumer’s plan without a Proof of Claim.

How to file a Proof of Claim

The claim could either be filed via an official court form or it could be an informal document (as long as it is in writing) and it states the creditor’s intention to claim. The consumer can attach this paper to the form evidence of his/her debt and he/she should find out from the trustee whether he/she should file it with the court clerk or directly with the trustee. Since the creditor is missing in action, the claim procedure is going to depend on how he/she is classified: secured, unsecured, or priority.

Are secured creditors required to file a claim too?

There are not many trustees that would pay the secured creditors without a formal claim, however, in cases in which the creditor has a lien on the consumer’s property, that lien stays, whether or not he/she files a formal claim.

Can the consumer object to a creditor’s claim?

The consumer can file a written objection, Form 2A (the notice of the objection) and schedule a hearing with the court. The creditor has the burden of proof with regards to the claim. He/she has to prove that the consumer really owe him/her.

Why do consumers object to creditors claims?

An unsecured creditor stated an amount that was more than the actual debt.
A secured creditor claims that the collateral is worth more than what was declared.
The creditor says that the debt is secured and the consumer thinks otherwise. If it is secured the consumer would have to pay it in full.
The creditor filed a late claim. It usually is not allowed but the creditor had shown a valid “excusable neglect” and so the court allowed it.
The creditor failed to show a valid paper trail on his/her claim on a lien. He/she was not able to produce a copy of the consumer’s original promissory note or any documents that could be linked to the original transactions.