In re Dumain
MEMORANDUM DECISION DISALLOWING CLAIM AS LATE-FILED
Dеbtor objects to the secured claim of Bank of America, N.A., alleging that the claim should be disallowed as late-filed. The Court holds that the Creditor was required to comply with the claims bar date
Jurisdiction
This Court has subject matter jurisdiction pursuant to
The Debtor objects to claim number 12-1, a secured claim filed by Bank of America, N.A. (“Creditor”). Dr’s Obj. 1, ECF No. 57. Debtor asserts that the claim should be disallowed as a consequence of Creditor’s failure to file its claim prior to the claims bar date. Id. Creditor’s proof of claim was filed on April 19, 2012 in the amount of $357,751.50, and included mortgage arrears of $4,093.45. Id. The first section 341 meeting of creditors was scheduled for August 24, 2011. Notice of 341(a) 1, ECF No. 7. The claims bar date was November 22, 2011 pursuant to Bankruptcy
Creditor opposes the objection, arguing that secured creditors need not file proofs of claim in chapter 13 cases pursuant to Bankruptcy
Creditor argues that disallowance of the largest secured claim will defeat the rehabilitative purposes of chapter 13. Cr’s Opposition 3, ECF No. 59. Creditor points out that its lien will survive the bankruptcy whether the secured claim is allowed or not. Id. Crеditor believes it would be at odds with the purpose of chapter 13 to leave the Debtor with a large unresolved debt upon completion of the case. Id.
In the alternative, Creditor argues that the Debtor acquiesced to the existence of the claim by listing it in her schedules and chapter 13 plan. Cr’s Opp. 4, ECF No. 59. Debtor has filed three proposed plans in this case. The first was filed contemporaneously with the petition on July 29, 2011 and did not list any prepetition debt owed to Creditor. Plan 3, ECF No. 4. An amеnded plan was filed July 17, 2012, and proposed to treat prepetition arrears to Creditor in the amount of $4,093.45. Amend. Plan 3, ECF No. 35. A second amended plan was filed on September 27, 2012 and did not list any prepetition debt to Creditor. Sec. Amend. Plan 3, ECF No. 42.
Discussion
I. The Creditor must obtain an allowed claim to receive distributions from the chapter 13 plan.
Creditor argues that “[i]n a chapter 13 case, a proof of claim need not be filed by a creditor which is asserting a secured claim.” Cr’s Opp. 2, ECF No. 59. Credi
(a) Necessity FOR Filing. An unsеcured creditor or an equity security holder must file a proof of claim or interest for the claim or interest to be allowed, except as provided in Rules 1019(3), 3003, 3004, and 3005.
Section 501 provides that “[a] creditor or an indenture trustee may file a proof of claim.” Section 502 states that “[a] claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest ... objects.” Therefore, a proof of claim creates a claim that is presumptively allowed unless a party in interest objects.
Section 1326(c) requires the chapter 13 trustee to make plan distributions to creditors under the plan. The trustee can only make those distributions on account of allowed claims.
Combined, these provisions indicate that the creditor must file a proof of claim to be entitled to plan distributions. Hogan,
This does not mean that Creditor is entirely incorrect in arguing that it need not file a proof of claim. “As a general rule, a secured creditor in a chapter 13 case is not required to file a proof of claim [and] may choose to ignore the bankruptcy proceeding and look to its lien for satisfaction of the debt.” Hogan,
II. The Creditor was required to comply with the deadline for filing claims imposed by
Having determined that Creditor was required to file a proof of claim to becоme entitled to distributions under the chapter 13 plan, the Court turns to the issue of timeliness. Bankruptcy
(a) Necessity FOR Filing. An unsecured creditor or an equity security holder must file a proof of claim or interest for the claim or interest to be allowed, except as provided in Rules 1019(3), 3003, 3004, and 3005.
BankruptcyRule 3002(c) states:
(c) Time for Filing. In a chapter 7 liquidation, chapter 12 family farmer’s debt adjustment, or chapter 13 individual’s debt adjustment case, a proof of claim is timely filed if it is filed not later than 90 days after the first date set for the meeting of creditors called under § 341(a) of the Code....
The fact that Bankruptcy
A. The three approaches,
i. The first approach: the secured creditor need not comply with any bar date.
Some courts reason that the omission of secured creditors from Bankruptcy
The court also found that this interpretation was consistent with section 502(b)(9), which provides that a claim to which an objection is madе should be allowed unless “proof of such claim is not timely filed.” Id. at *3. The court declined to decide whether a secured claim could be “untimely” if filed so late in the case that plan funds had already been distributed, making distribution to the secured creditor impossible. Id. The court left that issue for another day. Id.
ii. The second approach: the secured creditor must comply with a bar date, but the bar date is not necessarily the bar date provided in Bankruptcy
Other courts reason that the omission of secured creditors from Bankruptcy
The court agreed that bar dates are critical in ensuring the certainty of chapter 13 administration. Id. at 662 (citing In re Friesenhahn,
In the years before the Macias case was decided, there was a division among the cases as to whether the bar dаte applied to any late claim in chapter 13. Id. at 661 (citing In re Hausladen,
Congress expressly superseded Hausla-den in 1994 through the passage of section 502(b)(9), which provides that a late-filed claim may be disallowed. H.R. Rep. 103-835, 48, 1994 U.S.C.C.A.N. 3340, 3357 (“The amendment to section 502(b) is designed to overrule In re Hausladen,
The Macias court found the amendment to section 502(b) to be significant, holding that “the new statute does presume a ‘timeliness’ featurе, without distinguishing between secured or unsecured claims, and applies of course in chapter 13 cases.”
Other courts have suggested different deadlines, such as “upon completion of all plan payments by the debtor ... after the trustee files a final report ... or when the case is closed.” In re Hudson,
Hi. The third approach: secured creditors must comply with the bar date imposed by Bankruptcy
A third group of courts apply the bar date of Bankruptcy
The Dennis court also found that the omission of secured creditors from Bankruptcy
This reading of Bankruptcy
The court noted that confirmation of a plan does allow the secured claim to the extent provided in the plan. Id. Section 1327(a) makes the plan binding on all parties. Id. A secured creditor need not file a proof of claim to receive distributions under the plan to the extent the plan provides for the creditor; it must only timely file a proof of claim to be entitled to distributions to any other extent. Id. at 253.
The Dennis court also noted several policy rationales for imposing the Bankruptcy
B. There is little Second Circuit authority regarding the issue.
In re Harris,
[sjubparagraph (a) states who must file a proof of claim, (b) states where the claim is to be filed, and (c) states whenthe claim must be filed. To suggest that (c) requires a chapter 13 secured creditor to file a proof of claim within 90 days of the first day set for the meeting of сreditors would distort the clear language of the rule. If the drafters wished to include secured creditors in 3002(a) so that such creditors would come within the time limitation established by 3002(c), they would have done so.
Id. The Harris court held that reading of Bankruptcy
Harris also held that the rehabilitative purposes of chapter 13 were better served by allowing the secured creditor to file a proof of claim at any time.
In U.S. v. Vecchio (In re Vecchio),
In In re Elmont Elec. Co., Inc.,
C. The Court holds that secured creditors must comply with the bar date imposed by Bankruptcy
After reviewing the three approaches and the cases in the Second Circuit, the Court holds that Bankruptcy
The omission of secured creditor from Bankruptcy
Policy considerations further support this rеsult. Without a claims bar date, secured creditors could file a proof of claim at any time, which would disrupt distribution and lead to uncertainty of administration. The Court sees no practical reason why the bar date for secured creditors should be any different from the bar date imposed in Bankruptcy
The Harris court found that the rehabilitative process would not be served if secured claims could be disallowed as late-filed, as this would deny the debtor the ability to cure arrearages.
In this case, Creditor’s proof of claim was filed after the bar date imposed by Bankruptcy
III. The Creditor has not established the existence of an informal proof of claim.
Creditor also argues that the fact that Debtor listed the Creditor in its proposed plan and in its bankruptcy schedules means that the Debtor acquiesces to Creditor’s intent to hold it liable for the debt. Therefore, Creditor argues that it need not file a proof of claim in this case.
“The doctrine of informal proof of claim provides that ‘a creditor’s filing of a document ... which indicates, at a minimum, the basis for a claim and the creditor’s intent to hold the estate liable, may constitute an informal proof of claim capable of being later amended by a formal proof of claim.’ ” In re Dove House, Inc.,
To be an informal proof of claim, a document “must have been 1) timely filed with the bankruptcy court and become part of the judicial record, 2) state the existence and the nature of the debt, 3) state the amount of the claim against the estate, and 4) evidence the creditor’s intent to hold the debtor liable with the debt.” In re St. James Mechanical, Inc.,
Mere inclusion in the Debtors’ schedules does not constitute an informal proof of claim. In re Boudinot,
Creditor has not met its burden of establishing an informal proof of claim by pointing to the Debtor’s schedules and prоposed plan.
On July 17, 2012 the Debtor docketed an amended chapter 13 plan. Amend. Plan, EOF No. 35. Unlike the Debtor’s original plan and second amended plan, this plan listed Bank of America as a secured creditor owed prepetition arrear-ages. Amend. Plan 3, ECF No. 35. The amended plan listed arrears of $4,093.45 and a collateral value of $325,000 in Section D, Category 2(a)(iv).
This District’s Model Chapter 13 Plan states that by listing prepetition аrrears, the debtor “shall be deemed to have timely filed a proof of claim on behalf of each such Secured Creditor pursuant to
Bankruptcy Rule 3004 provides, however, that a proof of claim filed by the debtor or trustee on a creditor’s behalf must be filed “within 30 days after the expiration of the time for filing claims prescribed by
Conclusion
For the foregoing reasons, the Debtor’s objection to claim is GRANTED. The Debtor should submit an order consistent with this decision.
Notes
. Although the term "bar date” does not appear in the Bankruptcy Code, bankruptcy courts and practitioners оften refer to the deadline to file proofs of claim as the “claims bar date” or simply "bar date.”
. Unless otherwise indicated, all Bankruptcy Rule references are to the Federal Rules of Bankruptcy Procedure,
. Unless otherwise indicated, all sectional references are to the United States Bankruptcy Code,
. Section 726(a)(1) as it is written today states:
(1) first, in payment of claims of the kind specified in, and in the order specified in, section 507 of this title, proof of which is timely filed undersection 501 of this title or tardily filed on or before the earlier of—
(A) the date that is 10 days after the mailing to creditors of the summary of the trustee’s final report; or
(B) the date on which the trustee commences final distribution under this section;