A creditor in my chapter 13 filed a claim, what should I do?
8 May 2014
Answer: Do not panic as claims are a normal part of the process. However, it is very important to, and you must if you want to preserve your rights, object to the entire claim or the amount of the claim, if you have adequate grounds.
Claims establish the “rights of a creditor against assets of a debtor’s bankruptcy estate.” Hann v. Educ. Credit Mgmt. Corp. (In re Hann), 711 F.3d 235, 239 (1st Cir. 2013). A claim is either allowed or disallowed. See 11 U.S.C. § 502(a). Typically, when a claim is disallowed it only affects the interests of the creditor in the bankruptcy case. For example, if a claim is disallowed, and then the case is dismissed prior to a discharge entering, the creditor may still have their claim and be able to seek collection against the debtor after the case is over. Hann v. Educ. Credit Mgmt. Corp (In re Hann), 711 F.3d at 241-42.
However, if there is a factual determination made by the bankruptcy court as part of the decision to disallow the claim, the bankruptcy court’s decision is binding against the creditor. Id. In In re Hann, the creditor tried to collect a debt after the bankruptcy court had denied the creditor’s claim and made a determination that no debt was owed in the debtor’s prior bankruptcy. Id. at 241. The debtor was able to obtain sanctions against the creditor for its collection efforts after the case was over. Id. at 243. Thus, whether objecting to a creditor’s claim will only affect its rights in the bankruptcy case or forever, it is important to object if you have adequate grounds.
In the event that a creditor is collecting a debt against you that was taken care of in a prior bankruptcy or you do not owe the debt for another reason, you will likely need to take action to enforce your rights. Feel free to give this office a call.