Chapter 13 Debtor Opposition To Late Filed Unsecured Claim

Chapter 13 bankruptcy cases have claim deadlines by which date the debtor’s creditors are supposed to file claims in order to be included in the roster of creditors entitled to distributions of money out of the Chapter 13 plan. I represent a debtor who prior to filing owed money to a law firm which represented him in a pre-bankruptcy legal matter. Three months after the Chapter 13 claim deadline the law firm filed an unsecured claim.

The first question is whether or not the debtor cares if an unsecured creditor files a late claim. If a debtor is paying all of their disposable income into a plan, but the plan will not pay 100% of unsecured claim, then a late claim does not change the amount of the debtor’s monthly plan payment or total payments under the plan. No harm no foul. If the debtor’s plan must be a 100% plan for any number of reasons (such as the debtor’s desire to reaffirm an investment property) then a late filed claim is important to the debtor because the claim would increase plan payments.

In this case, my client is required to pay 100% of unsecured claims, and therefore, opposed the late claim. The creditor argued that they had actually signed a claim form before the deadline, but that it was incorrectly addressed and that the error was not discovered until recently. The court denied the creditor’s claim. The court said that late claims can be filed if there is an “excusable neglect” but that the attorney’s clerical error of not properly filing or mailing a claim form is not one of the excuses accepted by bankruptcy courts.