Secured Creditor Can’t File Late Claim in Chapter 13

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By Daniel Gill

A secured creditor in a Chapter 13 bankruptcy case has to file a claim on time, an Ohio bankruptcy court ruled ( In re Herrig , 2017 BL 217266, Bankr. N.D. Ohio, No. 16-33008, 6/23/17 ).

Although secured creditors don’t have to file proofs of claim, unlike unsecured creditors, any claim they do file must be timely if they want to receive payments under a Chapter 13 plan, Judge Mary Ann Whipple of the U.S. Bankruptcy Court for the Northern District of Ohio wrote in her June 23 opinion.

Robert and Melissa Herrig filed a Chapter 13 bankruptcy case on Sept. 23, 2016. Chapter 13 allows individuals receiving regular income to obtain debt relief while retaining their property. To do so, the debtor must propose a plan that uses future income to repay all or a portion of his debts over a three- to five-year period.

Tax Ease Ohio LLC had a claim against the Herrigs and a lien on their home arising from unpaid real property taxes, the court said.

Tax Ease Ohio, despite having notice of the date by which claims must be filed, failed to file a proof of claim.

Asks to File a Claim Late

The court asked the Herrigs if they wanted to file a claim on Tax Ease Ohio’s behalf, which was allowed under federal bankruptcy rules, but they declined.

The court explained to them that the lien would survive the bankruptcy whether or not there was a claim.

The Herrigs proposed a plan that did not include any property tax payments. Instead, they told the court that they “would worry about that problem when the proverbial ‘tomorrow’ arrived.” The court confirmed their plan.

Wanting to receive payments under the plan, Tax Ease Ohio filed a motion seeking permission to file a proof of claim late.

The court wouldn’t allow it. Although a secured creditor doesn’t need to file a proof of claim (Rule 3002(a)), “if a secured creditor wishes to participate and receive distributions in a Chapter 13 case, a proof of claim must be filed,” the court said.

Bankruptcy rule 3002(c) provides for a list of circumstances allowing for late-filed claims, but none of those was applicable in the case, the court said.

The result of the decision is that the tax lien-holder will have to wait until after the bankruptcy case concludes, at which point it can seek to enforce its rights under its tax lien.

To contact the reporter on this story: Daniel Gill in Washington at

To contact the editor responsible for this story: Jay Horowitz at

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