Proof of claim
When a Debtor files for chapter 13 bankruptcy, notice is sent to every creditor listed on the bankruptcy petition. In order to be paid in a chapter 13 plan a creditor must file a proof of claim. Each jurisdiction has certain requirements for what is required to be put in a proof of claim, but generally the proof of claim must provide the court with the total amount of debt owed, the basis for the debt, and the payment history.
In a chapter 13 case the Trustee pays the creditor pursuant to the claim and not the schedules. Therefore a party in interest typically the Trustee, the Debtor or the Debtors’ attorney, has an opportunity to review all the proof of claims to determine if the claim is correct. If the claim lists an incorrect value, if it is past the statute of limitations, or if it failed to provide the appropriate documentation a party can object to the claim in whole or in part. The bankruptcy court will then rule on the validity of the claim. If the objection is sustained the Debtors plan will pay on the claim in accordance with the court’s ruling. This means the claim may be completely wiped out and the debt will be discharged at the completion of the case and the Debtor will not need to pay on the claim.
There are some claims the Debtor will want to ensure are filed. In a consumer case this is typically the mortgage or the car, because if these secured claims are not paid they may be discharged but the lender will still have the ability to enforce any security agreements; i.e. a mortgage or title. The Debtor has an opportunity after the deadline to file claims on the creditor’s behalf. In addition, a court may enter a late filed claim but the creditor or debtor will need to prove that there is a good reason to allow the claim to be filed after the deadline.