The Allmand Law Firm, PLLC Difference

Unlike most bankruptcy firms in the Dallas / Fort-Worth area, Allmand Law Firm, PLLC spends the time to understand the complete financial picture for every one of our clients. We provide resources, tools and advice to address the unique needs of North Texans.

Failure To Follow Proper Bankruptcy Procedures Can Be Costly

Posted By admin || 19-May-2010

Failure to Follow Procedure can be CostlyIn the Chapter 13 bankruptcy case of Wilson, David M. and Jamie M.; In re, the bankruptcy court denied the debtors' objection to a creditor's proof of claim and the bankruptcy plan was not confirmed.

The details of the bankruptcy case:

The Chapter 13 debtors said that there were two claims secured by their home. Although the debtors' schedules identified neither debt as being contingent, unliquidated or disputed, the debtors' proposed plan made no provision for payment of either debt. Instead, the debtors said they were going to bring adversary pro­ceedings against these lenders. One of the lenders filed a secured proof of claim and objected to confirmation of the debtors' plan. The debtors responded by objecting to the claim and asking the court to disallow it. The court over­ruled the debtors' objection and sustained the creditor's objection.

The bankruptcy court said that the debtor could not just choose to forgo the proper procedures laid down by the bankruptcy code.  And objecting to a creditor's claim by sending an objection to the creditor's attorney and not to the bankruptcy court was a violation of proper procedures.  In order for the debtors to properly object to a creditor claim and for that objection to receive consideration by the bankruptcy court, the debtor must file with the bankruptcy court and provide real proof that there is a reason for an objection.

The bankruptcy court made the following statement:

"This court does not believe that a motion to disallow a valid secured claim, evidenced by a prima facie valid proof of claim, is the proper procedural vehicle to remove a lien claim from a parcel of real property," the court said. In addition, the debtors' objection was sent to the creditor's attorney rather than to the address stated in the POC for receiving notices. "Should the debtors seek to remove the lien, or otherwise contest it, they must: 1) file an adversary complaint; 2) serve the statutory agent for the creditor; 3) serve creditor's counsel, Tiffany & Bosco, with a copy of the adversary complaint; and 4) prove substantive grounds as to why the lien should be stricken," the court said.

Blog Home