A claim in a bankruptcy case is when a creditor states its right to payment from the debtor or the debtor's property. Claims must be made in writing, generally using the bankruptcy court's Proof of Claim form. Several parties can make objections to claims, and ask the court to deny the claim, or something about it, such as the type or class of claim.
A proof of claim is allowed or approved by the court unless an objection is made.
Process for Filing Claim Objections
An objection to a claim in a bankruptcy case must be written and filed with the court. A creditor or the bankruptcy trustee are usually the parties in a case that file objections. The objection may be based on:
- Issues controlled by federal or state law
- Issues related to whether or not the claim is allowable
Who Can File Objections?
Parties in interest can file objections. A party in interest is someone who has an interest in a bankruptcy case. Parties in interest include:
- Chapter 12 and Chapter 13 debtors and debtors in possession
- Chapter 7, Chapter 9 and Chapter 11 debtors
- The trustee
- The secured lender of a debtor from the period after the case was filed (a postpetition secured lender)
- A creditor of the debtor
- A committee in a Chapter 9 or Chapter 11 case
- A plan proponent
- A party with an interest in property held by the bankruptcy estate
Usually the trustee files objections to claims in a Chapter 7 or Chapter 11 case, even though many different types of parties can make objections. A debtor in possession usually has the duty to file objections in a Chapter 11 case, as no trustee is appointed in these cases, generally.
Claim Objection Form and Filing
The written objection must have the correct form and content so the court will review it. The document should clearly state it is an objection to a claim and contain:
- A clear identification of the claim
- Facts needed to support the objection
- A description of the legal reasons supporting the objection
- Statements showing the objection is being filed in the right court and case, that the objection is a core proceeding, and is signed by the proper person (for example, the attorney for the person raising the objection)
The original copy of the objection is filed with the bankruptcy court.
Notice and Hearing Claim Objections
A copy of the objection with notice of the hearing (including time and place) must be mailed or delivered to the claimant, the debtor or debtor in possession, and the trustee at least 30 days before the scheduled hearing. The court can reduce this time.
The notice of an objection served on a creditor by a debtor should contain the name, address and last four digits of the debtor's social security number. Check local court rules for any added notice requirements.
An evidentiary hearing on the objection is held after the debtor, the bankruptcy trustee and the claimant receive notice of the objection. A claim objection may sometimes lead to complex litigation, such as an objection to a product liability claim.
The court then decides to allow, disallow or modify the disputed claim. Parties can also ask the court to reconsider its decision.
Questions for Your Attorney
- Does the bankruptcy court have required standard forms to use for claim objections?
- Can the regular mail be used to deliver copies of objections and hearing notices?
- Will hearings on objections significantly slow down my case?