How To Challenge A Creditor’s Claim In Bankruptcy: Objecting To A POC
When you file bankruptcy your creditors are allowed to file claims, indicating the amount of debt you owe. This typically happens in a Chapter 13 case, where the Trustee is preparing to pay at least a portion of your unsecured debt and all of the secured debt you have that is provided for in your Chapter 13 Plan. Thus, it is common for creditors to file a proof of claim, which is a document that proves what you owe. The claim will set forth the type of debt (auto loan, mortgage loan, or other form of indebtedness) and will state how much is owed. In some instances the claim figure is different than what the debtor shows they owe. In that case, an objection to the proof of claim (POC) is in order.
In order to make a valid objection to a proof of claim, you must show that the payment amount requested will in some way impact you. The Bankruptcy Code provides a procedure for objecting to a claim, and this is how it works:
- The Trustee might object to the claim because if the amount claimed due is more than what the Chapter 13 Plan provides for, the Trustee would have to remit more to that particular creditor than planned. This can cause the payment calculations for your plan to become mathematically unfeasible, and might even cause your plan to be denied by the Court.
- The debtor can object to the proof of claim, because it is the debtor that is making the Chapter 13 Plan payments. When a claim is filed that is much higher than expected, the debtor might be forced to increase his monthly payment to the Trustee. This may not be financially feasible, so objecting to the amount is a good idea.
It is unlikely that you will have a creditor file a proof of claim in a Chapter 7 case, but it does happen. If the Chapter 7 Trustee locates an asset, for example a piece of collateral that the debtor is not permitted to claim as exempt or a piece of collateral for which the lender failed to properly note their security interest, that collateral is subject to seizure by the Trustee. The Trustee then sells the collateral and uses the proceeds to pay unsecured creditors a portion of what they are owed. In these cases, a creditor would be required to file a proof of claim in the Chapter 7 case in order to get paid. If you have questions about when and how to object to a creditor’s claim, call our office.
If you need help with bankruptcy issues, contact our office. Call a Plantation, Florida debt relief attorney today.