Oh No! I Forgot to File My Proof of Claim on Time. Now What?

If you’re an unsecured creditor, it can be harder to get payment from a bankrupt debtor. But to have a chance of getting paid, you must file a proof of claim to assert your right to a distribution.

Whether the debtor files for chapter 7, 11 or 13 bankruptcy protection doesn’t matter. A proof of claim is required unless the debtor has scheduled the creditor’s claim in the correct amount and as undisputed. The bankruptcy court sets the deadline for filing a proof of claim. The debtor can object to the claim for various reasons, including if it is untimely filed.

So what should a creditor do if they fail to file their proof of claim before the deadline? File it anyway.

When can a creditor file their proof of claim late?

The only reasons the court may extend time to file a proof of claim are provided in Federal Rule of Bankruptcy Procedure 3002:

• A “governmental unit” files a proof of claim no later than 180 days after the order for relief
• “[A]n infant or incompetent person or the representative of either” files a late proof of claim
• “[A]n unsecured claim which arises in favor of an entity or becomes allowable as a result of the judgment may be filed within 30 days after the judgment becomes final”
• “A claim arising from the rejection of an executory contract or unexpired lease of the debtor”
• If a dividend appears possible after a notice of insufficient assets to pay a dividend was given to creditors
• “If notice of the time to file a proof of claim has been mailed to a creditor at a foreign address…if the court finds that the notice was insufficient under the circumstances”

What if the filing was late for another reason?

Recent cases show that unless the claim was filed late for one of these reasons, the bankruptcy court cannot deem it timely filed. Bankruptcy courts cannot fashion substantive rights and remedies not contained in the bankruptcy code and rules. They also cannot override sections of the bankruptcy code. Under Federal Rule of Bankruptcy Procedure 9006(b)(3), the bankruptcy court can only extend the period to timely file proofs of claim “to the extent and under the conditions stated in” Rule 3002.  

Notably, Judge Norman in the Southern District of Texas held in November that even though a creditor was left off the schedules and mailing matrix, the court could not extend the filing time because none of the reasons raised by the creditor fell within those stated in Rule 3002. Lack of notice or other excusable neglect is not a basis for extending the time to file a proof of claim.

So what should a creditor do?

The best thing to do is go ahead and file the claim, even if it is late. There is nothing in the bankruptcy code that bars a creditor from filing a proof of claim late. The onus is on the debtor to raise an objection to untimeliness under Section 502(b)(9) of the Bankruptcy Code. If the claim was untimely filed because the debtor did not give proper notice to the creditor, the creditor’s claim is not discharged. Under Section 523(a)(3) of the Bankruptcy Code, the failure to list a creditor’s claim on the schedules or in the mailing matrix renders the debt non-dischargeable. If the claim was not timely filed in error, the creditor should still file the claim and force the debtor to object.

Please contact Rick Shelby or any other member of Phelps’ Bankruptcy team if you have questions or need assistance filing a proof of claim.