Kentucky Bankruptcy Law

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What’s in a claim?

Claims play a major role in Chapter 13 bankruptcies. They are essentially superfluous in a “no asset” Chapter 7 so they are often not filed in such cases except for secured creditors. If there are non-exempt assets that will be liguidated in a Chapter 7, then it is an “asset” Chapter 7 and claims serve a similar function as I’ll describe for the Chapter 13.

In a Chapter 13, a plan is proposed by the Debtor that spells out what the Debtor will pay in over time. The plan also describes how various creditors will be treated. Some districts, such as the Eastern District of Kentucky, treat provisions of the plan as motions that become orders of the court once the plan is confirmed (blessed by the court). In such districts the plan provisions can “cram down” or “strip off” liens by secured creditors based on the value of the asset they have a lien against pursuant to 11 U.S.C. Section 506. However, I am venturing a bit off of the topic of claims.

For a creditor to actually receive what is owed to them per the plan, they must file a claim. There is a form available just for this purpose and the creditor can either send it in to the court clerk to be electronically filed or, if they have set up an account, they can electronically file it themselves. The claims for most creditors (other than governmental agencies) must be filed by a deadline specified in the Notice that is sent out to all creditors when a bankruptcy is filed. If they miss the dealine, their claim will likely be denied and the full debt discharged as to the Debtor.

The claim also puts the Debtor on notice of any additional fees and penalties that the creditor may be entitled to recieve under the loan contract or by law. It is up to the Debtor to review the claims and object to anything that is erroneous or to excessive fees. It is also good practice to object to secured claims if the plan calls for them to be crammed down or stripped off. The reason to object to claims is because they are presumed to be sufficient proof, on their face, to establish the existence and amount of a debt. This is because there are hefty penalties to filing false claims. In the next post I will give a little more detail as to when it is beneficial to object to a claim.

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January 11, 2011 - Posted by | Uncategorized

4 Comments »

  1. […] construction and bankruptcy law. … … Read more from the original source: What's in a claim? « Kentucky Bankruptcy Law ← Questions for the Tax Lady: January 10th, […]

    Pingback by What's in a claim? « Kentucky Bankruptcy Law | Bankruptcy Advice | January 11, 2011 | Reply

  2. […] business, employment, construction and bankruptcy law. … … Excerpt from: What's in a claim? « Kentucky Bankruptcy Law ← First Consult a Bankruptcy […]

    Pingback by What's in a claim? « Kentucky Bankruptcy Law | Stop Bankruptcy Now | January 11, 2011 | Reply

  3. […] to a claim in a Chapter 13 for a 506 cram down I previously talked about the purpose of claims in bankruptcy. I want to focus in now on objecting to a claim. Some districts, including the Eastern […]

    Pingback by Objecting to a claim in a Chapter 13 for a 506 cram down « Kentucky Bankruptcy Law | January 29, 2011 | Reply

  4. […] previously talked about the purpose of claims in bankruptcy. I want to focus in now on objecting to a claim. Some districts, including the Eastern […]

    Pingback by Troutman & Napier, PLLC | Objecting to a claim in a Chapter 13 for a 506 cram down | December 15, 2014 | Reply


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