Bankruptcy No Document Proof of Claim Disallowed

17 Jul Bankruptcy No Document Proof of Claim Disallowed

On July 14, 2009, the 10th Circuit Court of Appeals issued a decision disallowing a “no doc” claim in a Bankruptcy Case. Such a holding by the 10th Circuit now binds all Courts in that Circuit and will have an impact on similar proof of claims throughout the United States.

In the case of Caplan v. B-Line, the 10th Circuit agreed with the Bankruptcy Court and reversed the Bankruptcy Appellate Panel in disallowing a claim by a debt buyer. The debt buyer, “B-Line,” apparently purchased the debt and tried to collect on the same in the Bankruptcy Case by filing a proof of claim with no supporting documentation. In addition to”B-Line” failing to attach any documentation, it also failed to explain at the hearing on the objection to the claim why it did not attach any documentation. Instead, it solely rested on the Bankruptcy Schedules which listed a similar claim ending in the same 4 digit account number.

The 10th Circuit disallowed the claim based upon Bankruptcy Rule 3001 and Official Form 10, both of which require a claimant to attach documentation to support the claim. Since no documentation was provided, the 10th Circuit appropriately enforced the burden of proof requirements under the Bankruptcy Rules and Official Form 10 and concluded that there was no “prima facie evidence of the validity and amount of the claim.”

So what does this mean? Examine all the claims in your Bankruptcy Case. If any fail to contain any documentation, you should object or otherwise be prepared to pay a claim that fails to comply with the Bankruptcy Rules and Official Form 10.

Written by Michael G. Doan

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