《楊清泉律師專欄》DEBTOR OBJECTIONS TO CREDITOR CLAIMS IN CHAPTER 13…(PART I)
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DEBTOR OBJECTIONS TO CREDITOR CLAIMS IN CHAPTER 13 MUST HAVE LEGAL BASIS(PART I)
Creditors of debtors who file for Chapter 13 bankruptcy relief have 90 days from the initial 341 A meeting of creditors to file their proof of claims. The 90 day deadline is called the claims bar date. A claim is defined by Section 101(5) of the bankruptcy code as any claim for money owed or breach of contract. Debtor has the right to object to a proof of claim. An objection to the proof of claim must be filed, asserting the reasons for the objection, served on the creditor, and a hearing on the objection is set. The court may decide to sustain or overrule the objection at the hearing. If the objection is sustained, the claim is not paid by the plan. If the creditor does not respond to the objection, the court normally sustains the objection, unless the objection is frivolous.
A debtor who objects to a proof of claim without legal basis may be seen as manipulating and abusing the bankruptcy system. A legal basis for objecting is an argument that is strong enough to defeat the claim. For example, if creditor’s proof of claim is based on a credit card that was previously discharged in a Chapter 7 case, a legal basis for objecting to that claim is that the claim is based on a discharged debt therefore no longer collectible. Another legal basis is the statute of limitations. If the proof of claim is based on a debt whose last payment was made more than 4 years ago, the objection will be based on the legal argument that the statute of limitations has lapsed, therefore the claim is no longer enforceable.
In Re Davis, the bankruptcy court revoked confirmation of a Chapter 13 debtor’s plan after discovering that the debtor used plan confirmation as part of a scheme to avoid paying her credit card debts. After confirming a plan that provided for full payment of her credit card debt, debtor objected to every unsecured claim alleging that the creditor failed to attach sufficient documentation. The court overruled all the objections. “This is a case about an affluent debtor who sought to manipulate bankruptcy procedures to accomplish what the Code prohibits-the elimination of all of her credit card debts despite her obvious ability to repay those debts over time,” the court said. “Here, the debtor obtained confirmation of her Chapter 13 plan by representing that she intended to pay all of her unsecured creditors in full. The court relied on this representation in finding that the debtor had filed her petition and her reorganization plan in good faith. The DEBTOR HOWEVER INTENDED TO SEEK DISALLOWANCE OF EVERY SINGLE CLAIM FILED IN HER CASE BASED ON NON-SUBSTANTIVE OBJECTIONS TO THEIR CLAIMS. The Court finds that the conduct of the debtor and her counsel throughout this case established that they have acted in bad faith and abused the bankruptcy process…”
《楊清泉律師專欄》DEBTOR OBJECTIONS TO CREDITOR CLAIMS IN CHAPTER 13…(PART II)
Creditors of debtors who file for Chapter 13 bankruptcy relief have 90 days from the initial 341 A meeting of creditors to file their proof of claims. The 90 day deadline is called the claims bar date. A claim is defined by Section 101(5) of the bankruptcy code as any claim for money owed or breach of contract. Debtor has the right to object to a proof of claim. An objection to the proof of claim must be filed, asserting the reasons for the objection, served on the creditor, and a hearing on the objection is set. The court may decide to sustain or overrule the objection at the hearing. If the objection is sustained, the claim is not paid by the plan. If the creditor does not respond to the objection, the court normally sustains the objection, unless the objection is frivolous.
A debtor who objects to a proof of claim without legal basis may be seen as manipulating and abusing the bankruptcy system. A legal basis for objecting is an argument that is strong enough to defeat the claim. For example, if creditor’s proof of claim is based on a credit card that was previously discharged in a Chapter 7 case, a legal basis for objecting to that claim is that the claim is based on a discharged debt therefore no longer collectible. Another legal basis is the statute of limitations. If the proof of claim is based on a debt whose last payment was made more than 4 years ago, the objection will be based on the legal argument that the statute of limitations has lapsed, therefore the claim is no longer enforceable.
In Re Davis, the bankruptcy court revoked confirmation of a Chapter 13 debtor’s plan after discovering that the debtor used plan confirmation as part of a scheme to avoid paying her credit card debts. After confirming a plan that provided for full payment of her credit card debt, debtor objected to every unsecured claim alleging that the creditor failed to attach sufficient documentation. The court overruled all the objections. “This is a case about an affluent debtor who sought to manipulate bankruptcy procedures to accomplish what the Code prohibits-the elimination of all of her credit card debts despite her obvious ability to repay those debts over time,” the court said. “Here, the debtor obtained confirmation of her Chapter 13 plan by representing that she intended to pay all of her unsecured creditors in full. The court relied on this representation in finding that the debtor had filed her petition and her reorganization plan in good faith. The DEBTOR HOWEVER INTENDED TO SEEK DISALLOWANCE OF EVERY SINGLE CLAIM FILED IN HER CASE BASED ON NON-SUBSTANTIVE OBJECTIONS TO THEIR CLAIMS. The Court finds that the conduct of the debtor and her counsel throughout this case established that they have acted in bad faith and abused the bankruptcy process…”
《楊清泉律師專欄》DEBTOR OBJECTIONS TO CREDITOR CLAIMS IN CHAPTER 13…(PART II)
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