Bankruptcy Rule Changes:

Secured Creditors Must File Claims

New Deadline for Filing Proofs of Claim in Bankruptcy Cases

By Trev E. Peterson

Congress requires that I disclose that our firm is a “debt relief agency” under the Bankruptcy Code. We help people file for bankruptcy relief under the Bankruptcy Code. As with all articles on this website, the contents of this article are not intended as legal advice for any specific legal problem. Nothing in this article is intended to create an attorney-client relationship between the author and the reader. The author is licensed to practice law in Nebraska only, if you are involved with a bankruptcy in a state other than Nebraska you are encouraged to consult with an attorney licensed in the state in which the bankruptcy case is pending.

Among the changes to the Federal Rules of Bankruptcy Procedure that take effect on December 1, 2017 are changes to Rule 3002 dealing with the filing of proofs of claim. Rule 3002(a) was amended to require that a secured creditor file a proof of claim for its claim to be considered under the Bankruptcy Code. Failure to file a proof of claim alone does not, however, affect the validity of the lien of the secured creditor. The failure of a secured creditor to file a proof of claim will affect the ability of a secured creditor to receive payments under a bankruptcy plan. Secured creditors need to be certain that their claims are timely filed.

The major change is in Rule 3002(c) dealing with the change in the date on which a proof of claim is required to be filed. The pre-change deadline was 90 days after the section 341 meeting. The amended rule requires that claims be filed 70 days after the entry of the order for relief–which in Nebraska is usually the day the bankruptcy is filed. The change requires that creditors move quickly to file claims in bankruptcy cases.

There are limited circumstances under which an extension of the dead line to file a claim can be filed. An extension can be granted if the notice was insufficient under the circumstances to give the creditor a reasonable time to file a claim because the debtor failed to timely file the list of creditors’ names and addresses or if the notice was insufficient under the circumstances to give the creditor a reasonable time to file a proof of claim and the notice was mailed to the creditor at a foreign address. Any extension is limited to 60 days from the date that the Court rules on the motion for an extension of the deadline.

Simply wanting more time to file a claim is not listed as a basis for the Court granting an extension of the claim deadline. There is generally no reason for a creditor to require additional time to file a claim. The creditor has the information necessary to file a claim, including the exhibits supporting the claim. The prudent course for a creditor is to get a claim on file as soon as the case is filed. If a claim has to be amended, then the claim can be amended after the original claim was filed—although when the claim deadline has expired the filing of an amended claim may require the claimant to file a motion to allow the late amendment to the claim.

There is an exception for claims secured by the debtor’s residence-where the proof of claim has to be filed within 70 days from the entry of the order for relief, but the mortgage creditor has an additional 120 days from the entry of the order for relief to file the loan documents. This should provide home lenders with adequate time to provide the loan documents – usually the note and the trust deed—that are required to be filed with the mortgage lender’s proof of claim.

Creditors are encouraged to act quickly when they receive a bankruptcy notice. It may be that Nebraska will continue its practice in Chapter 7 cases of not requiring that proofs of claim be filed unless there are assets in the Chapter 7 case. Creditors should review the notice received at the beginning of a case to determine whether a claim needs to be filed and the deadline for filing a claim. If a claim is not required in the initial notice, the creditor should be aware that a notice requiring the filing of claims may be served if the Chapter 7 trustee discovers assets that the trustee intends to administer. Claims have always been required to be filed in Chapter 9, 11, 12 and 13 cases.