As per Joliet bankruptcy lawyer David Siegel, unsecured creditors must file their claims within 90 days set for the first Meeting of Creditors. The whole point of the notice of the Meeting of Creditors is to start the timeframe’s running. By time frames, I mean the creditors have a certain amount of time to file a claim and be part of the Chapter 13 payment plan. Unsecured creditors have 90 days from the date originally set for the first Meeting of Creditors. Governmental entities such as the IRS and other governmental groups have 180 days to file a proof of claim.
The debtor also has the ability to object to particular claims. For example, if a particular creditor files a secured claim when it really should be an unsecured claim, then the debtor can file an objection. Under the current model plan, the plan governs how each individual creditor is treated under the Bankruptcy Code. However, if you are trading a creditor a certain way but the creditors’ dollar amount or claim amount is higher than it should be, you as the debtor have the right to object.
One of the greatest things about Chapter 13 is that once a case is confirmed and the objection period has run or the claims period has run. If you complete your Chapter 13case and that creditor, provided it’s unsecured, can no longer collect upon you in any way, shape or form. So it basically sets up a time frame where creditors either need to be a part of your bankruptcy case or they are not part of your bankruptcy case. If creditors fail to file a proof of claim and you complete your case, then those creditors cannot seek to collect from you in the future. You effectively have eliminated the debt as long as it is unsecured by their failure to file a proof of claim under the Bankruptcy Code.
We see this more and more these days as many creditors see a plan proposing 10% payment plan and they simply do not wish to go through the hassle or the legal expense to get a claim on file. It is to the debtor’s advantage if creditors don’t file claims in their bankruptcy case.