By: Kim M. Casey
The Federal Rules of Bankruptcy Procedure which became effective on December 1, 2017 make changes to the timing of the filing of proofs of claim in a bankruptcy case and alter the procedure for determining the amount of a claim and the value of any security that is held by the creditor.
New Proof of Claim Filing Deadline
Under the former Rules, creditors were given 90 days after the first date set for the 1st Meeting of Creditors in which to file a claim. The new Rules require the filing of a proof of claim and significantly shorten the deadline for filing a Proof of Claim to 70 days after the filing of the Bankruptcy Petition, so it is important to act promptly when notice of Bankruptcy filing is received. The failure to file the proof of claim in a timely fashion may affect the ability to receive payments in the bankruptcy case. However, failure to file alone will not void any lien held by the creditor.
Additional Procedures for Determining the Amount of Secured and Priority Claims
The new Rules also clarify that the amount of a secured claim may be determined by motion, in a claim objection, or in a Chapter 12 or 13 Plan. A priority claim is determined only by motion or in a claim objection. Adding the procedure that the secured claim can be determined in a Plan requires a creditor to carefully review the Plan and to file and serve an Objection to Confirmation of the Plan at least 7 days before the date of the confirmation hearing, because a determination contained in a Plan is binding on the creditor, even if a contrary proof of claim is filed or if the debtor includes that claim in the schedules filed in the case.
Chapter 13 Plan Form Requirements
Fortunately, the new Rules provide that the all Plans (whether the National Form for Chapter 13 Plans which has been adopted by the Bankruptcy Court for the Northern District of Illinois or any local forms adopted in other districts) contain significant warning provisions for creditors on the first page of the Plan, which alert a creditor to claim modification, lien avoidance and non-standard provisions that may be contained within the body of the Plan. In heeding these warnings, creditors should be aware that the new Rules apply in all cases and districts and require prompt action to protect valuable rights in the bankruptcy case.
HolmstromKennedy is ready to assist with knowledgeable advice on the bankruptcy process.
Kim Casey is a member of the firm practicing in the areas of commercial, business, bankruptcy and real estate litigation. She represents lending institutions, other businesses and individuals in commercial, guaranty and real estate loan litigation in both state and federal courts, including the U.S. Bankruptcy Court.