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Objections to Creditor’s Claims

March 1, 2023 David L. Stevens


A creditor who wishes to recover money from a debtor in bankruptcy is required to file a “proof of claim” which is a written statement describing the reason for and amount of the debt allegedly owed by the debtor to the creditor. A proof of claim is a “written statement setting forth a creditor’s claim” which must conform substantially to the appropriate form provided by the bankruptcy court. Official Form B10 is available on the official websites of most bankruptcy courts. The manner in which creditors and equity security holders present their claims or interests to the bankruptcy court is governed by the bankruptcy code.

What is a Proof of Claim?

Proof of claims are most commonly asserted in Chapter 7 asset cases, Chapter 13, and Chapter 11 bankruptcy matters. It should be noted that the majority of consumer Chapter 7 cases are considered “no-asset” bankruptcy matters and do not require proof of claims. Generally, priority unsecured creditors and secured creditors will file proof of claims and supporting documents in bankruptcy cases. This filing is considered to be evidence of a valid claim against the bankruptcy estate. In order for a creditor to continue to maintain that claim, they must meet certain deadlines and evidence requirements.

In filing the proof of claim, the creditor has the burden of showing its legitimacy. For example, if a claim is based on a writing, the creditor must file the original or a duplicate with the proof of claim. Once that burden is met, an “interested party” may object to the claim. The filing of a proof of claim triggers the claims allowance and disallowance process and the bankruptcy court’s jurisdiction to govern over such matters. What this means is once the claim is filed, a party with an interest in the case, such as the debtor, trustee, or even another creditor, can bring a motion before the court to determine whether the claim should be allowed.

Once allowed, the creditor has a right to payment out of the bankruptcy estate’s assets (if there are any), depending on the priority of its claim. If the claim is not allowed, the debtor’s bankruptcy case moves on, without any money or assets going to the creditor with the disallowed claim.

When are Proofs of Claim Required?

In all cases, creditors will receive a notice of the bankruptcy which will often include the deadline to file a proof of claim, also known as the bar date. In cases where a proof of claim is not required, the bar date may not be set at the time the bankruptcy notice is sent to creditors. Generally, Chapter 7 and Chapter 13 cases required a proof of claim be filed no later than 70 days after the 341 meeting. Chapter 11 cases will often vary, but are often 90 days from the date of the 341 meeting of creditors.

While it may not always be required to file a proof of claim, it is best practice to timely complete and file a proof of claim in every case. This will provide the creditor to provide specific amounts, the nature of, the basis and the priority of the claim, in addition to information as to any applicable secured property. It will also provide accurate contact information for the creditor.

Late filings can sometimes be excusable, and the Supreme Court has given the following factors to determine whether the delay is excusable: "(1) whether allowing the late claim will prejudice the debtor; (2) the length of the delay in filing the claim and the resulting potential impact on the judicial proceedings; (3) the reason for the delay, including whether the delay was within the reasonable control of the creditor filing the claim; and (4) whether the creditor that filed the claim acted in good faith."

Common Reasons for Disallowance

In order to contest a proof of claim, Bankruptcy Rule 3007 requires the objection be in writing and filed and served thirty days prior to the hearing date. While neither the Bankruptcy Code nor the Bankruptcy Rules provide a strict bar date, courts will generally set a deadline for filing these types of objections.

Typically, objections regarding a proof of claim will include disputes over the amount of the debt, failure of a creditor to attach adequate information supporting the claim, and disputes over the property securing a debt. Section 502(b) of the Bankruptcy Code lists nine exclusive grounds for disallowance, including the following common examples:

  • Untimely Claims: Claims that are not filed by the deadline provided by the court are generally disallowed. Any creditor who files a late claim is prohibited from participating in the case and receiving any payment with respect to its tardy claim. Some exceptions, such as the “excusable neglect” exception discussed above do apply. But it is generally best to file within the court’s deadlines if possible.


  • Unenforceable Claims: Claims that would be unenforceable against the debtor, such as those outside of any applicable statute of limitations, are generally disallowed. These are claims that a creditor would not be able to collect on even had the bankruptcy case not been filed.


  • Insider and Attorney Claims: Claims for services of either an insider, meaning a director, officer, or other person in control, or their attorney. This does exclude “reasonable value” for services provided by those party to the debtor, but it is often a hard fought battle to determine whether those services were actually provided at a reasonable value.


  • Unmatured Interest Claims: Claims for unmatured interest or interest that would accrue post-petition are almost entirely disallowed.


  • Lease Rejection Claims: Claims for damages by landlords whose leases are rejected during bankruptcy proceedings are generally disallowed. While the Bankruptcy Code does provide some compensation for a landlord for the losses suffered by termination of a lease by a bankrupt-tenant, large claims for breaches of long-term leases which would prevent other general unsecured creditors from recovery are often barred. Section 502(b)(6) effectively caps the landlords claims after the mitigation of damages by a landlord required under applicable state law.


Whether you need help defending a claim you hold against a debtor, or wish to challenge the debt a creditor claims, we are well qualified as a full-service bankruptcy law firm for people in these and other New Jersey counties: Passaic County, Hudson County, Essex County, Bergen County, Morris County, and Sussex County. Call us today at 973-870-0434 or toll free 888-412-5091.


David L. Stevens

I have a passion for what I do. There are few things I enjoy more than helping good people and viable businesses find solutions to overwhelming debt.

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