Chapter 13 Bankruptcy Debtors Must Make Sure Secured Creditors File Claims

February 16, 2012 by  Filed under: Bankruptcy 

In Chapter 13 bankruptcy, debtors propose a repayment plan to their creditors and to a trustee soon after filing bankruptcy. The plan provides the terms for repayment of the debts listed in the bankruptcy, which may include the payment amount, value of collateral, duration of repayment, interest rate, and whether the debt will be paid in set and equal payments or pro rata. Creditors and the trustee review the plan to determine if their claims are being provided for in a fair way, and if they are unhappy with their treatment they can object to confirmation of the plan by the court. If no objections are filed the plan is usually confirmed and all creditors are bound by the treatment provided for their claim in the plan.

However, creditors cannot stop paying attention to the bankruptcy case after confirmation. Creditors must file proof of their claim with the court before they will receive payments from the trustee as provided for in the plan. Sometimes creditors don’t file claims and as a result they do not get paid. When unsecured creditors don’t file claims, debtors are usually pleased because the amount they may have to pay in their bankruptcy case may decrease. But when secured creditors don’t file a proof of claim, the debtor must cure the deficiency or they may lose their house, car, or other collateral.

Secured claims are debts which are secured by collateral like cars and houses. Having a secured claim provides some protection to the debtor. For example, if a mortgage isn’t paid the mortgage lender can foreclose on the house and recover the debt owed them by selling the property. When secured creditors who are listed in a bankruptcy plan don’t file proof of their claim, they don’t get paid, and when secured creditors don’t get paid they repossess and foreclose upon the collateral. It doesn’t seem fair that a bankruptcy debtor should suffer because of the creditor’s failure to file a claim, but that is how the system works.

Bankruptcy debtors must pay close attention to creditor’s claims after confirmation of their plan. The Bankruptcy Code allows debtors to file a claim on behalf of the secured creditor, assuming that the creditor doesn’t file a claim. Watching the deadline to file a claim and making sure that proof of the secured claim is filed can save the debtor a lot of money, their house, and their car.

Nathan S. Graham is an attorney with The Wright Firm, LLP. Nathan represents individuals and debtors in Chapter 7 and Chapter 13 bankruptcy cases. The Wright Firm, LLP, has offices in Dallas, Denton, Lewisville, and Frisco.

For more information about Nathan Graham visit the Wright Firm’s web site at or read Nathan’s blog at

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