01 Jul Today, I am Reviewing the Claims File from my Client’s Chapter 13
Several years ago, the Chapter 13 trustees and the bankruptcy judges in the Northern District of Georgia added a new administrative burden to lawyers who file Chapter 13 cases in the Atlanta area. Under this local rule, within 30 days after the “bar date” for creditors to file claims, lawyers must review all of the claims filed in their client’s Chapter 13 case and file a 1 page report certifying this review. A lawyer’s failure to file this report can result in a reduction of his fee.
Normally, I am not in favor of court mandates, especially those that involve fines. However, in this case, I think that bar date review local rule makes a lot of sense and it protects the interests of debtors.
Unlike some other bankruptcy filing districts, the Northern District of Georgia allows for the “confirmation” of Chapter 13 cases long before the last date that creditors can file claims. Thus, it is very possible that a case will be confirmed before all of the claim information is known. If a claim comes in higher than expected, or if an unexpected claim is filed, a Chapter 13 case could easily go over term – i.e., the payout could exceed 60 months, contrary to law.
By reviewing the claims file early on in the case, a lawyer will be able to identify potential problems while there is still time to correct those problems. A case running 65 months can be fixed by increasing the payment. This increase might amount to $10 or $15 per month if caught early on, but could be an extra $200 per month if caught in month 45.
The Northern District’s procedure is not failproof. The claims review must be filed after all non-governmental claims are due but before tax claims are due. You see, Congress gives the IRS and other taxing authorities extra time to file their claims. In practice, however, the IRS and the Georgia Department of Revenue usually file their claims early and if not, I calendar for a 2nd review after the tax claim bar date since tax claims are usually priority claims that must be paid in full.
There are any number of problems that can arise in a Chapter 13 bankruptcy post confirmation – terms problems arising from unexpected claims ought not be one of them.
Jonathan Ginsberg, Esq.
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