Objecting to a Creditor Claim

Greeves & Roethler, PLC

The bankruptcy process provides for the orderly payment of claims.  There are three kinds of claims filed in bankruptcy.  First, there are priority claims, such as recent tax debts.  Second, there are secured claims, such as mortgages and vehicle loans.  Third, there are general unsecured claims, such as credit card bills.  The Bankruptcy Code, and the individual case, via a Chapter 13 or Chapter 11 Plan, prioritizes the payment of claims and specifies the terms of payment, such as whether the claim will bear interest and, if so, the interest rate, which may be reduced.

Claims timely filed with the Court are presumed to be valid.  However, the Debtor has the opportunity to review the claims and to object, if appropriate.  For example, our firm just handled a case where the creditor was paid in full outside of the bankruptcy.  We are objecting to the claim under the Bankruptcy Code, Section 502, which provides that the Debtor may object when the claim is unenforceable against the debtor and the property of the debtor.  We are seeking to have the claim disallowed and expect that the Court will agree with the legal principal that a creditor should be paid one time and only one time.  To allow additional payment would constitute unjust enrichment of the creditor.

Thank you for taking the time to read this article.  This blog post was written by Tempe bankruptcy Lawyer Douglas B. Price, Esq. of Greeves, Price & Roethler, PLC.

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