§ 132.2 — In General: Filing is Required for Allowance

Revised: November 5, 2009

[1]

Section 501(a) of the Code provides, “A creditor . . . may file a proof of claim.”1 “Creditor” means “entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor.”2 “Claim” means “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.”3

[2]

Several things are not debatable from the plain language of § 501. First, any entity with a prepetition right to payment has a claim and may file a proof of claim. Second, the kind of claim is irrelevant to whether the Bankruptcy Code permits the filing of a proof of claim—it does not matter that the claim holder is secured or unsecured—any claim holder “may file a proof of claim.”4 Third, § 501(a) is permissive, not mandatory—an entity with a claim “may” file a proof of claim; it is not compelled to do so by any provision of the Bankruptcy Code. There may indeed be consequences if a creditor chooses not to file a proof of claim,5 but there is no compulsion about this process.

[3]

Section 501(b) and (c) permit the Chapter 13 trustee, the debtor and codebtors to file proofs of claim on behalf of a creditor under certain circumstances.6 For example, § 501(c) states, “If a creditor does not timely file a proof of such creditor’s claim, the debtor or the trustee may file a proof of such claim.”7 Similarly, if a creditor does not “timely file a proof of such creditor’s claim,” a codebtor may file a proof of claim under § 501(b).8

[4]

Section 502(a) of the Code reads, “A claim . . . proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest . . . objects.”9 The plain language of § 502(a) requires the filing of a proof of claim under § 501 to accomplish allowance of a claim. No other provision of the Bankruptcy Code permits allowance of a claim in a Chapter 13 case in any other way—the creditor that wants to have an allowed claim can only get there if it files a proof of claim or if someone files a proof of claim on behalf of the creditor.10

[5]

The principal consequence of failing to file a proof of claim is that the creditor cannot have an allowed claim, and if it cannot have an allowed claim, then it will not be entitled to distributions under the plan.11 Any rational creditor would conclude from §§ 501 and 502 that it should file a proof of claim because it wants to have an allowed claim. Filing a proof of claim is the only sure first step—relying on the trustee, the debtor or a codebtor to file a proof of claim is too uncertain to risk the loss of allowance of the claim. This conclusion abides without regard to the kind of claim—there is nothing in § 501 or § 502 to suggest that unsecured, partially secured, fully secured or priority claim holders are treated any differently for purposes of allowance: all may file proofs of claim, and allowance is possible only if a claim is filed.

[6]

Unfortunately, the drafters of the Bankruptcy Rules and a few courts have conspired to make a nightmare of illogic and confusion out of the straightforward treatment of claims by the Code. The trouble begins with the wording of Bankruptcy Rule 3002. Bankruptcy Rule 3002 was intended to implement §§ 501 and 502 of the Code. For reasons understood only by the drafters, Bankruptcy Rule 3002(a) states, “An unsecured creditor . . . must file a proof of claim . . . to be allowed.”12 The reference to only “unsecured creditor” in Bankruptcy Rule 3002(a) creates the negative implication that other creditors—secured creditors, partially secured creditors, priority creditors—do not have to file proofs of claim to accomplish allowance—an entirely false suggestion. The use of the word “must” in Bankruptcy Rule 3002(a) is a correct statement of the law—it is indeed true under §§ 501 and 502 that no creditor can accomplish allowance of its claim unless it has a filed proof of claim. But to conspicuously depart from the permissive wording of the Code and then limit this mandate to “unsecured creditor(s)” is misleading and dangerous.

[7]

Creditors should ignore the limitations and negative implications in Bankruptcy Rule 3002(a) and instead follow the clear dictates of §§ 501 and 502 of the Code. Unsecured, partially secured, secured and priority claim holders should always file proofs of claim in Chapter 13 cases. The omission of any reference in Bankruptcy Rule 3002(a) to secured claims or priority claims (or postpetition claims)13 is an endless source of unnecessary controversy.

[8]

The time within which to file proofs of claim is important in bankruptcy cases; but, except for claims of governmental units in bankruptcy cases filed after October 22, 1994,14 the Code does not define how long a creditor has to file a proof of claim in a Chapter 13 case. The legislative history to § 501 recites, “The Rules of Bankruptcy Procedure will set the time limits, the form and the procedure for filing, which will determine whether claims are timely or tardily filed.”15

[9]

Discussed in more detail below,16 11 U.S.C. § 502(b)(9), as amended in 1994 and again in 2005, provides that upon objection, a claim shall not be allowed to the extent that

(9) proof of such claim is not timely filed, except to the extent tardily filed as permitted under paragraph (1), (2), or (3) of section 726(a) of this title or under the Federal Rules of Bankruptcy Procedure, except that a claim of a governmental unit shall be timely filed if it is filed before 180 days after the date of the order for relief or such later time as the Federal Rules of Bankruptcy Procedure may provide, and except that in a case under chapter 13, a claim of a governmental unit for a tax with respect to a return filed under section 1308 shall be timely if the claim is filed on or before the date that is 60 days after the date on which such return was filed as required.17
[10]

The cross-references to § 726(a)(1), (2) and (3) in § 502(b)(9) should not create confusion in Chapter 13 cases. Section 726 controls the distribution of property in a Chapter 7 case.18 The cross-references in § 502(b)(9) to § 726(a)(1), (2) and (3) do not affect the timeliness of claims in Chapter 13 cases.

[11]

For example, § 726(a)(1) provides a first priority of distribution in a Chapter 7 case for payment of a priority claim under § 507, “proof of which is timely filed under section 501 of this title or tardily filed . . . on or before . . . the date on which the trustee commences final distribution under this section.”19 In a Chapter 13 case, there will be no date “on which the trustee commences final distribution under this section” because § 726 does not apply in Chapter 13 cases. The trustee in a Chapter 13 case will commence final distribution under § 1326,20 not under § 726.

[12]

The legislative history to the 1994 Act indicates that the amendments to § 502(b) were designed to deal with late-filed claims “by disallowing claims that are not timely filed.”21 The amendments to § 726(a) were intended to “conform” that section with the disallowance of late-filed claims in § 502(b) to “assure that the disallowance of late-filed claims . . . does not affect their treatment under § 726(a).”22 From this legislative history, it is reasonably inferred that the cross-reference to § 726(a)(1), (2) and (3) in § 502(b)(9) was not intended to affect the meaning of timeliness for the purpose of filing proofs of claim in a Chapter 13 case. It can be expected that creditors with tardily filed claims that might be saved by § 726(a)(1), (2) or (3) will argue otherwise. The first reported Chapter 13 decision to consider the cross-reference to § 726 in § 502(b)(9) concluded that the cross-reference has no effect on the timeliness of proofs of claim.23 At least one court has read the cross-reference to § 726(a)(1) in § 502(b)(9) to relieve a priority support claim holder of the responsibility to timely file a proof of claim.24

[13]

Bankruptcy Rule 3002(c) defines “timely” for filing proofs of claim by creditors other than governmental units as: “In a . . . Chapter 13 individual’s debt adjustment case, a proof of claim is timely filed if it is filed not later than 90 days after the first date set for the meeting of creditors called under § 341(a) of the Code, except as follows . . . .”25 There is an important lack of parallelism within Bankruptcy Rule 3002. Unlike the limited filing mandate in Bankruptcy Rule 3002(a), the timeliness definition in Bankruptcy Rule 3002(c) is not limited to unsecured claims. The time for filing all nongovernmental proofs of claim in Chapter 13 cases is 90 days after the first date set for the meeting of creditors.26 Only with respect to unsecured claims is Bankruptcy Rule 3002 consistent: to be timely, the holder of an unsecured claim must file proof of its claim within 90 days of the first date set for the meeting of creditors.27

[14]

In Chapter 13 cases filed before October 22, 1994, former Bankruptcy Rule 3002(c) probably continued to define “timely” for the filing of all proofs of claim.28 In cases filed after October 22, 1994, the Rule gave way to 11 U.S.C. § 502(b)(9) but only with respect to claims of governmental units. Except for governmental units, the 1994 Act did not clarify whether Bankruptcy Rule 3002(c) defines “timely” for proofs of claim other than unsecured claims.

[15]

Because the meeting of creditors must be scheduled within 50 days of the filing of the Chapter 13 case,29 the deadline in Bankruptcy Rule 3002(c) for timely filing of nongovernmental claims in Chapter 13 cases is almost always less than 140 days after the filing of the case.30 The 90-day period is counted from the first date set for the meeting of creditors, not from the date that the meeting of creditors is actually held, nor is it timed from the first meeting at which the debtor actually appears. If the meeting of creditors is continued or reset, the rule contemplates that the 90 days will be counted from the first date, not the continued date.31 In cases filed after BAPCPA, these counting rules for timely nongovernmental claims should not be upset when the meeting of creditors is “held open”32 to accommodate the filing of tax returns required by § 1308,33 but the same cannot be said for tax claims relating to returns filed after the first date set for the meeting of creditors.34


 

1  11 U.S.C. § 501(a).

 

2  11 U.S.C. § 101(10)(A). “Creditor” also includes any entity “that has a claim against the estate of a kind specified in §§ 348(d), 502(f), 502(g), 502(h) or 502(i) of this title.” 11 U.S.C. § 101(10)(B).

 

3  11 U.S.C. § 101(5)(A). “Claim” also means “right to an equitable remedy for breach of performance” under the circumstances described in 11 U.S.C. § 101(5)(B).

 

4  11 U.S.C. § 501(a).

 

5  See § 288.1 [ Failure to File Proof of Claim ] § 135.5  Failure to File Proof of Claim. See, e.g., In re Baldridge, 232 B.R. 394, 396 (Bankr. N.D. Ind. 1999) (“No one is ever required to file a proof of claim in any bankruptcy proceeding; it is just that not doing so has consequences.”).

 

6  See §§ 285.1 [ Timing, Form, Superseding and Amended Claims ] § 134.1  Timing, Form, Superseding and Amended Claims before 2005, 286.1 [ Strategic Considerations: When to File Claims for Creditors ] § 134.3  Strategic Considerations: When to File Claims for Creditors and 511.1 [ Filing of Claims by Debtor or Trustee: New Rule 3004 ] § 134.2  Filing of Claims by Debtor or Trustee after 2005 Amendments to Bankruptcy Rule 3004.

 

7  11 U.S.C. § 501(c).

 

8  11 U.S.C. § 501(b).

 

9  11 U.S.C. § 502(a). See § 287.1 [ Timing, Procedure and Evidence Presumption ] § 135.1  Timing, Procedure and Evidence Presumption.

 

10  11 U.S.C. § 501(b) and (c) permit the debtor, the trustee and a codebtor to file proofs of claim on behalf of the principal creditor under certain circumstances. See Fed. R. Bankr. P. 3004 and 3005. See §§ 285.1 [ Timing, Form, Superseding and Amended Claims ] § 134.1  Timing, Form, Superseding and Amended Claims before 2005, 286.1 [ Strategic Considerations: When to File Claims for Creditors ] § 134.3  Strategic Considerations: When to File Claims for Creditors and 511.1 [ Filing of Claims by Debtor or Trustee: New Rule 3004 ] § 134.2  Filing of Claims by Debtor or Trustee after 2005 Amendments to Bankruptcy Rule 3004.

 

11  See § 288.1 [ Failure to File Proof of Claim ] § 135.5  Failure to File Proof of Claim.

 

12  Fed. R. Bankr. P. 3002(a) (emphasis added) (after amendment effective Dec. 1, 1996). Prior to December 1, 1996, Bankruptcy Rule 3002(a) stated, “An unsecured creditor . . . must file a proof of claim . . . in accordance with this rule for the claim . . . to be allowed.” Fed. R. Bankr. P. 3002(a) (emphasis added) (prior to amendment in 1996). Bankruptcy Rule 3002(a) contains two pertinent exceptions to the mandate that unsecured creditors “must file a proof of claim.” Bankruptcy Rule 3004 permits the filing of a proof of claim by the debtor or the Chapter 13 trustee if the claim holder fails to timely file its own proof of claim. See §§ 285.1 [ Timing, Form, Superseding and Amended Claims ] § 134.1  Timing, Form, Superseding and Amended Claims before 2005, 286.1 [ Strategic Considerations: When to File Claims for Creditors ] § 134.3  Strategic Considerations: When to File Claims for Creditors and 511.1 [ Filing of Claims by Debtor or Trustee: New Rule 3004 ] § 134.2  Filing of Claims by Debtor or Trustee after 2005 Amendments to Bankruptcy Rule 3004. Bankruptcy Rule 3005 permits a guarantor, surety, endorser or other codebtor to file a proof of claim if the primary creditor has not filed a proof of claim within the time provided in Bankruptcy Rule 3002.

 

13  See §§ 281.1 [ Postpetition Claims ] § 132.9  Postpetition Claims and 302.1 [ Postpetition Claims ] § 137.1  Postpetition Claims before BAPCPA.

 

14  11 U.S.C. § 502(b)(9), as amended by the Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 213, 108 Stat. 4106 (1994), applicable in Chapter 13 cases filed after October 22, 1994 (see Pub. L. No. 103-394, § 702, 108 Stat. 4106 (1994)), provides that a claim of a governmental unit “shall be timely filed if it is filed before 180 days after the date of the order for relief or such later time as the Federal Rules of Bankruptcy Procedure may provide.” Section 502(b)(9) was further amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub. L. No. 109-8, 119 Stat. 23 (2005), to extend the timely filing of claims for taxes when the debtor delays a tax return required by new 11 U.S.C. § 1303. See below in this section, and see §§ 276.1 [ Governmental Units ] § 132.3  Governmental Units, 289.1 [ Untimely Filed Claims in Cases Filed before October 22, 1994: The Hausladen Phenomenon ] § 135.6  Untimely Filed Claims in Cases Filed before October 22, 1994: The Hausladen Phenomenon, 290.1 [ Untimely Filed Claims in Cases Filed after October 22, 1994 ] § 135.7  Untimely Filed Claims in Cases Filed after October 22, 1994, 389.1 [ New Tax Return Duties—In General ] § 42.4  Tax Return Duties—In General393.1 [ Consequences of Failure to File or Provide Tax Returns ] § 42.8  Consequences of Failure to File or Provide Tax Returns, 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA and 513.1 [ Taxes ] § 136.3  Taxes after BAPCPA.

 

15  H.R. Rep. No. 95-595, at 351 (1977); S. Rep. No. 95-989, at 61 (1978) (emphasis added).

 

16  See §§ 290.1 [ Untimely Filed Claims in Cases Filed after October 22, 1994 ] § 135.7  Untimely Filed Claims in Cases Filed after October 22, 1994, 292.1 [ Taxes ] § 136.2  Taxes before BAPCPA, 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA and 513.1 [ Taxes ] § 136.3  Taxes after BAPCPA.

 

17  11 U.S.C. § 502(b)(9), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 213, 108 Stat. 4106 (1994), and further amended by Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub. L. No. 109-8, 119 Stat. 23 (2005) .

 

18  11 U.S.C. § 726(a), as amended by the Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 213, 108 Stat. 4106 (1994), and further amended by Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Pub. L. No. 109-8, 119 Stat. 23 (2005), provides in part:

(a) Except as provided in section 510 of this title, property of the estate shall be distributed—
(1) first, in payment of claims of the kind specified in, and in the order specified in, section 507 of this title, proof of which is timely filed under section 501 of this title or tardily filed on or before the earlier of—
(A) the date that is 10 days after the mailing to creditors of the summary of the trustee’s final report; or
(B) the date on which the trustee commences final payment under this section;
(2) second, in payment of any allowed unsecured claim, other than a claim of a kind specified in paragraph (1), (3), or (4) of this subsection, proof of which is—
(A) timely filed under section 501(a) of this title;
(B) timely filed under section 501(b) or 501(c) of this title; or
(C) tardily filed under section 501(a) of this title, if—
(i) the creditor that holds such claim did not have notice or actual knowledge of the case in time for timely filing of a proof of such claim under section 501(a) of this title; and
(ii) proof of such claim is filed in time to permit payment of such claim;
(3) third, in payment of any allowed unsecured claim proof of which is tardily filed under section 501(a) of this title, other than a claim of the kind specified in paragraph (2)(C) of this subsection.

 

19  11 U.S.C. § 726(a)(1)(B).

 

20  11 U.S.C. § 1326(a)(2) provides, “If a plan is confirmed, the trustee shall distribute . . . in accordance with the plan as soon as practicable.”

 

21  140 Cong. Rec. H10,752, H10,768 (section-by-section analysis by Congressman Brooks).

 

22  140 Cong. Rec. H10,752, H10,768 (section-by-section analysis by Congressman Brooks).

 

23  See In re Lang, 196 B.R. 528, 530 (Bankr. D. Ariz. 1996) (“[T]he issue is whether § 726(a)(1)–(3) applies to all chapters because it is referenced in § 502(b) or whether the exception contained in § 502(b) is limited to claims which independently fall within the explicit provisions of § 726(a). . . . Rule 3002(c)(6) includes a procedure whereby claims may be filed late and still participate in a distribution if a surplus remains after the allowed (timely) claims have been paid in full. . . . [S]uch a distribution scheme has no place in a Chapter 13 reorganization setting. . . . [T]he exceptions for late-filed claims set forth in § 726, and referenced in § 502, are only applicable to claims filed in a Chapter 7 case.”).

 

24  In re Lewis, 227 B.R. 886, 890 (Bankr. W.D. Ark. 1998) (Priority support claim is not disallowed just because it is untimely. “[S]ection 502(b)(9) sets forth the general rule that a claim is allowed unless it is untimely. However, section 502(b)(9) also contains an exception for those debts described in section 726(a)(1). Section 726(a)(1) provides for distribution to priority creditors, including support obligations under section 507(a)(7) whether or not the claim was timely filed so long as the claim is filed before the trustee commences distribution. . . . Accordingly, the court is not required to disallow an untimely proof of claim for a priority debt, even in the chapter 13 context. United States v. Waindel (In re Waindel), 65 F.3d 1307, 1309–10 & n.7 (5th Cir. 1995). Since the debtor’s entire obligation to Patricia Lewis is in the nature of support, it is a priority debt under section 507(a)(7) and is not subject to disallowance merely because it was untimely filed.”). See § 290.1 [ Untimely Filed Claims in Cases Filed after October 22, 1994 ] § 135.7  Untimely Filed Claims in Cases Filed after October 22, 1994.

 

25  Fed. R. Bankr. P. 3002(c) (emphasis added) (as amended effective Dec. 1, 1996). Prior to the 1996 amendment, Bankruptcy Rule 3002(c) provided: “In a . . . Chapter 13 individual’s debt adjustment case, a proof of claim shall be filed within 90 days after the first date set for the meeting of creditors called pursuant to § 341(a) of the Code, except as follows . . . .” Fed. R. Bankr. P. 3002(c) (emphasis added) (prior to 1996 amendment).

 

26  But see § 280.1 [ Secured Claim Holders ] § 132.7  Secured Claim Holders for discussion of the timeliness of filing proof of a secured claim.

 

27  See United Feeds, Inc. v. Greenig (In re Greenig), 152 F.3d 631 (7th Cir. 1998) (In a Chapter 12 case, “timely filed” for an unsecured proof of claim means filed within the 90-days provided in Bankruptcy Rule 3002(c), unless an exception applies; unsecured creditor not permitted to late file a proof of claim notwithstanding that plan explicitly stated the claim was allowed and provided payment.).

 

28  Did Bankruptcy Rule 3002(c) (as amended effective Dec. 1, 1996) apply to all pending cases, including those filed before October 22, 1994? Does anybody care? A creditor that might care would be a governmental unit that filed an “untimely” proof of claim between 90 days after the meeting of creditors and 180 days after the petition in a Chapter 13 case filed before October 22, 1994, that was still active on December 1, 1996.

 

29  Fed. R. Bankr. P. 2003(a). See § 42.1 [ Timing and Procedure ] § 43.1  Timing and Procedure.

 

30  See §§ 276.1 [ Governmental Units ] § 132.3  Governmental Units and 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA for discussion of the time to file governmental claims.

 

31  The similarly worded bar date for the filing of complaints objecting to the discharge or dischargeability of claims under § 523(c) and Bankruptcy Rules 4004 and 4007 is counted from the first date set for the meeting of creditors, notwithstanding that the meeting may be continued or that the debtor failed to appear. See, e.g., DeLesk v. Rhodes (In re Rhodes), 61 B.R. 626 (B.A.P. 9th Cir. 1986); European-American Bank v. Hill (In re Hill), 48 B.R. 323 (N.D. Ga. 1985).

 

32  See § 398.1 [ Holding Open the Meeting of Creditors ] § 43.7  Holding Open the Meeting of Creditors.

 

33  See discussion of tax return duties imposed on debtors by BAPCPA beginning at § 42.2  Consequences of Failure to File Required Information, Including “Automatic Dismissal”.

 

34  See §§ 508.1 [ New Timing Issues ] § 133.5  Tax Claim Exception after BAPCPA and 513.1 [ Taxes ] § 136.3  Taxes after BAPCPA.