How to Object to a Creditor's Proof of Claim
Learn when you can object to a creditor's proof of claim, and why you might want to.
A proof of claim is a form creditors must file with the court before they can get paid in your bankruptcy case. When a creditor files a proof of claim in bankruptcy, it must provide the court with information regarding your debt and attach certain supporting documentation to prove that it has a valid claim. After the creditor files its proof of claim, you will have a chance to review it to make sure it is accurate. If you believe that the creditor’s proof of claim is incorrect, you may be able to object and ask the court to disallow it. Read on to learn more about objecting to proofs of claim in bankruptcy.
For more information on the proof of claim, visit our Proof of Claim in Bankruptcy topic page.
When Are You Allowed to Object to a Creditor’s Proof of Claim?
You can object to a creditor’s proof of claim only if you are considered a party in interest. In general, this means that you can object to a proof of claim if the payment of that claim will have a financial impact on you. For the most part, whether you will have standing to object to a proof of claim depends on whether you are filing for Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
If you file a no-asset Chapter 7 bankruptcy (where there will be no distribution made to any creditors), you will not be able to object to proofs of claim filed in your case because the bankruptcy trustee will not be paying any of your creditors.
Even if you have nonexempt assets that will be used to pay back your creditors, you may not object to a proof of claim unless payment of that particular claim will have a financial impact on you. In most cases, debtors are not affected by how their property is distributed among their creditors.
But sometimes you can benefit financially by objecting to a proof of claim in Chapter 7 bankruptcy. For example, if you can keep more of your property or pay off more of your nondischargeable debts (obligations that are not wiped out by your discharge) by objecting to another creditor’s claim, you will typically have standing to challenge that proof of claim.
Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, you are always allowed to object to proofs of claim filed in your case. This is true even if your plan doesn’t pay anything towards your general unsecured creditors because the court may still be able to modify the terms of your plan later.
Reasons to Object to a Creditor’s Proof of Claim
Below are some of the most common reasons you might challenge a creditor’s proof of claim in bankruptcy:
- the amount you owe is not correct
- the claim is incorrectly classified as a secured or priority debt
- there is no supporting documentation attached to the claim
- the claim is a duplicate
- the claim is for a debt that you didn’t incur, and
- the claim was not filed timely.
How to Object to a Creditor’s Proof of Claim
In general, the specific procedures for objecting to a proof of claim will vary depending on the rules in your jurisdiction. Review your court’s local rules carefully before filing an objection to a proof of claim.
In most cases, you will typically have to obtain a hearing date, file a written objection with the court that explains why you are objecting to the claim, and send notice of your objection to the creditor and the bankruptcy trustee.
If the creditor doesn’t file an opposition to your objection, the court will disallow the claim. But if the creditor opposes your objection, you will need to explain to the judge at the hearing why you believe the creditor’s claim is not correct or valid