Generally, if a creditor doesn’t file a proof of claim in a timely fashion in your Chapter 13 case, that creditor does not get paid. If it is a dischargeable debt, and if the creditor got proper notice of the Chapter 13, the debt will be discharged at the end of the case.
So why would you ever want to file a claim for a creditor who neglected to? One reason is if the unfiled claim is for a non-dischargeable debt. For example, if you owe a priority child support claim, and they don’t file a claim, they will not get paid in the Chapter 13. You will probably still owe them after the case is over, and the money that was earmarked to pay them will simply go to pay more to the other unsecured creditors.
Another situation is if you owe a secured debt, for example a car loan that is supposed to be “crammed down” in the Chapter 13 plan, but the creditor does not file a proof of claim. In this case also, the car creditor will not be paid by the trustee, and the earmarked money will go instead to the unsecured creditors. Two problems can arise. Secured creditors need not file a claim by the deadline but they still retain their secured status. If the Chapter 13 completes, and they never get paid, they can then repo the car, because they haven’t been paid their secured amount. Of course, if it is 5 year plan, the car may not be worth enough for you to keep after the plan ends.
The other problem that can arise is that the secured car creditor can file a claim (but only for the secured amount) at any time prior to the end of the case. I’ve seen it happen where the secured creditor files their secured claim just before the case is over. This would make the plan infeasible, and subject to dismissal by the trustee, because there is not enough time left to pay all of the claims.
Early in your Chapter 13 case you will receive a notice to allow claims, or a notice of claims filed. It is important to carefully review the list of claims filed (and not filed) by your creditors. After you have reviewed the list, be sure to speak with your bankruptcy attorney to see if any further action is needed.
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Last modified: March 22, 2008