When you file for Chapter 13 bankruptcy, a number of steps must be completed before you receive a discharge. Some of these steps involve your creditors. In order to receive payment under your Chapter 13 repayment plan, some creditors must file proofs of claim with the court. Occasionally, these claims must be amended after the initial filing. Receiving an amended proof of claim in your case might be alarming at first, but it rarely alters the bankruptcy process, at least not in a significant way.
What Is It?
When you file for Chapter 13 bankruptcy, you enter into a repayment plan that lasts three to five years. If any debts remain unpaid after you complete your plan, the court discharges them and you're no longer responsible for paying them. Creditors of unsecured debts such as credit cards can claim a share of your payments by submitting a proof of claim to the bankruptcy court. The claim must describe the debt you owe, including the principal balance, interest, fees and expenses assessed. It must also state whether your creditor believes the debt should receive priority status. Priority status means it will be among the first of your debts to receive payment. Your creditor must provide supporting documentation with its claim. Secured creditors aren't ordinarily required to submit claims because secured debt is backed by collateral from which payment can be secured. However, secured creditors may also elect to file a claim.
Shortly after you file for Chapter 13 bankruptcy, a meeting of creditors is scheduled, also known as a "341 meeting." At this meeting, the bankruptcy trustee places you under oath and asks questions about your income and debts. He discusses the consequences of your eventual bankruptcy discharge. Creditors are invited to attend this meeting, although they don't typically do so. They must submit their proofs of claim within 90 days of the first date set for this creditors meeting. In some cases, the deadline comes up so quickly that creditors overlook certain things in the rush to file on time. Common mistakes include citing an incorrect claim amount, failure to attach supporting documentation, misuse of check boxes, improperly claimed priority status, and failure to indicate that a document is an amended claim.
When creditors discover an error in their initial proof of claim, they may correct that mistake by submitting an amended proof of claim. If the mistake was a late filing, however, the court is unlikely to approve either the original or the amended claim unless the creditor can successfully argue that the delay was caused by excusable neglect. Otherwise, the court treats the situation as though the creditor never filed a claim at all. The court is likely to determine that the creditor forfeited its right to receive payment under the repayment plan, and it will discharge the debt. Amended claims must be submitted before the bar date established by the bankruptcy court -- that is, the last possible day that the court will accept any proof of claim, including an amendment.
Sometimes when creditors file an amended proof of claim, they fail to indicate its amended status on the claim form. When this happens, it appears that the creditor has submitted two proofs of claim to the bankruptcy court. Although this may alarm you, it's an error that can easily be corrected. If the creditor fails to bring the error to the court's attention, the debtor is always free to inform the bankruptcy trustee of the duplicate filing.
- Michael Blann/Digital Vision/Getty Images