Suppose a creditor forgets to file a proof of claim?

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file claim consumer bankruptcy

Generally speaking a creditor who has knowledge of your case and fails to file a proof of claim will lose its right to receive any payment out of your estate. In a Chapter 7 case, that can lead to a surplus that will eventually be paid back to you. In a Chapter 13 case, that can reduce the amount you will have to pay under your plan or increase the amount that other creditors will receive.

There are some cases where you want a creditor to file a claim. For example, if a creditor has security that’s worth less than its claim, you will want to “strip down” the claim to the value of the security. Therefore, the Bankruptcy Code allows the debtor or trustee to file a proof of claim on behalf of a creditor who fails to file its own within the time limit. Unless the creditor objects, that substitute proof of claim binds the creditor.

(Reviewed 11.14.08)