James Kutkowski runs The Law Offices of J. Kutkowski, Esq. and spent a decade in the debt collection industry, so he knows a thing or two about debt collector’s tricks. Here, he talks about what a proof of claim is, and how you can tell when one is bogus.
Before we can even discuss what a bogus proof of claim is, we first need to know what proofs of claim are. After bankruptcy is filed, creditors are required to file a proof of claim in order to get paid for their debts. That may sound simple, but it isn’t. If you can, picture a classroom full of screaming children. Imagine that each of these children represent a creditor. Filing a proof of claim is the equivalent of that child raising his hand and saying, “Mr. or Mrs. Debtor owes me money!”
The important thing about a proof of claim is the proof. Anyone can say that you owe the money, but the creditor needs to prove it. That’s where the services of an experienced bankruptcy attorney can be vital to you successfully proving that a proof of claim is bogus or not.
Looking at Documentation
When I look at a proof of claim, the first thing I do is look at what documentation the creditor has provided. The original creditor has no excuse whatsoever for not providing proof of the debt. A collection agency may have an excuse, but they are still required to group the debt is valid and that they indeed owned it.
In most Chapter 13 bankruptcy cases, fighting a bogus proof of claim is not worth it because you’re only paying one to two percent of the unsecured debt in your plan. But if you are playing 100%, then it becomes more important.
If a creditor files a proof of claim worth $6,000 and you prove that the proof of claim is invalid, that will save your client $100 per month in their Chapter 13 point. That’s $100 that your client can use rather than give it someone who didn’t even bother to file a correct proof of claim.
Exceedingly Old Proofs
So how do I know my proof of claim is bogus? The first thing I look at after seeing a proof of the debt is when the last activity on the debt was. If the last activity on the debt is more than four years ago, I have a pretty good argument that this debt is no longer collectible, because creditors no longer have the right to sue for the debt in Pennsylvania. Generally speaking though, the proofs of claim that I object to are the proofs of claim that are exceedingly old.
It’s also important to know that the attorney signing the proof of claim and the objection could both be subject to sanctions, if the objections are frivolous or the proof of claim is invalid. So an attorney should be careful before he files an objection to a proof of claim. Furthermore, creditors should be careful before they file a proof of claim on an iffy account.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
