Bankruptcy Basics: Why Object To Claims Filed In A Chapter 13 Case?

Your Chapter 13 case is filed and your creditors were all listed. Your plan provides for your taxes to be paid and your automobile. Your plan is a 0% plan (meaning there is no money left over after all your daily expenses and paying the trustee enough to pay the taxes, car, and his fee for 36 months to pay any more to the unsecured creditors), but….the credit card companies are all filing proofs of claim. And you don’t recognize some of these creditors. Or, the amounts are way more than you thought you might owe. Are these creditors going to get paid? They might, under certain circumstances, unless you file an objection to their proof of claim. When a creditor files a proof of claim, they are directed, under the bankruptcy rules, to provide enough documentation to support their claim, so that the debtor, the trustee, the court, can see that the claim is correct and should be paid. If the creditor does not provide this documentation, that is a reason to object. If the creditor files a proof of claim for a debt that can no longer be collected  under state law (the statute of limitations has passed), then that is a reason to object. If the debt is not your debt, then that is a reason to object.

Why object if you have a 0% percent plan, when no one is probably going to get paid anyway? It is that “probably” business. Something may happen and you may have to pay 100% of allowed claims in order to get out of your bankruptcy case early. This is when objecting to bogus claims early in the case becomes very important later on in the case.

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