When you file for bankruptcy in New York, the majority of your creditors will file a claim in order to receive any proceeds from the bankruptcy estate. Although not all of them may receive anything, filing their claim provides information about your debt and increases the likelihood that they will receive something if your trustee sells your assets (Chapter 7), or you agree to a repayment plan (Chapter 13).
There are some reasons why one or more of your creditors does not file a proof of claim in your bankruptcy case. The debt may be very small, or you filed for Chapter 7 and have no assets, so that they wouldn’t get paid anyway. While filing claims on behalf of these creditors may seem strange, there are two instances when it makes sense to do so.
You want to catch up on secured debt arrears
If you have a lot of secured debt, such as car loans and mortgages, then filing for Chapter 13 will let you catch up on missed payments and avoid repossession or foreclosure. If these lenders fail to file a claim for any reason, then doing so on their behalf presents their claims to the court so you can include them in the repayment plan.
The problem with omitting these claims is that your trustee may petition the bankruptcy court to pay off your unsecured debts (e.g., credit cards, medical bills, utilities) instead. To make sure that secured debts get the right attention, you may need to file a claim on behalf of an unresponsive creditor.
You have nondischargeable debts
Some obligations, such as child support, spousal maintenance, student loans, and some types of taxes, cannot be discharged in bankruptcy. Whether you have nonexempt property liquidated in a Chapter 7 case or will be repaying your debts in a Chapter 13 payment plan, you want to ensure that these priority debts get paid so that they don’t remain a burden to you.
The majority of creditors will file their claims within 90 days of your 341 hearing, also known as the meeting of creditors. (If the government has a claim, then it has up to 180 days after you file for bankruptcy.) If the deadline has passed and a secured or priority creditor has not submitted its information, then you have up to 30 days to file on their behalf.
Filing a claim on behalf of creditor requires a solid knowledge of bankruptcy law and the claim process. Your New York bankruptcy attorney will guide you through this rarely-used but still essential process so that your discharge gives you the fresh start that you have been seeking.
If you are considering filing for bankruptcy, then contact the law offices of Jayson Lutzky, P.C. at 718-514-6619. Mr. Lutzky is an attorney with over 36 years of experience and offers free in-person initial consultations. Visit www.MyNewYorkCityLawyer.com/Bankruptcy to learn more.