The Journal of The DuPage County Bar Association

Bankruptcy Claims - Actori incumbit onus probatio1 -Know Your Deadlines and File Those Claims!

By Arthur W. Rummler


You’re sitting in your office pondering whether you are going to binge watch Netflix, HBO or Amazon Prime Video this weekend – decisions, decisions. Amidst the daily mail, you spy a not so ubiquitous plain white envelope with a clear cellophane window. 


You recognize the type of envelope, the font, the contrast of the black ink against the bright white paper. A notice from the United States Bankruptcy Court has arrived on your desk! What delightful information is inside? In your mind you can hear the refrain of “Wells Fargo Wagon” from the famous Meredith Wilson musical, “The Music Man”: 

“O-ho the Wells Fargo Wagon is a-comin’ now,
I don’t know how I can ever wait to thee
It could be something for someone who is no relation,
But it could be . . . something special . . . just for me!”

Something special has just arrived. You reach for the letter opener and slice open the envelope to release the missive. Unfolding the paper you see “Notice of Bankruptcy Case.” Scanning down the page you realize that one of your former clients has filed bankruptcy. The client owes you money. You are a creditor in a bankruptcy case. What do you do?


The Automatic Stay
Every lawyer should know that once a bankruptcy case is filed, an automatic stay goes into effect. The automatic stay2 is essentially an injunction against creditors of a bankruptcy debtor which prohibits most actions against the debtor or property of the debtor. As the name implies, it is automatic. No motion or further action is required on your part. The automatic stay goes into effect upon the filing of a bankruptcy petition with the appropriate federal district court.


Thus, creditors cannot take further legal action against the bankrupt debtor in furtherance of collecting their debt. Absent some extenuating circumstances, such as fraud or some other enumerated exception to discharge3, the debt is likely to be discharged and you will forever be barred from taking action to collect on the debt. Or, the more remote, the debtor could voluntarily choose to pay the debt.


Chance for Recovery – A Light in the Distance?
In certain bankruptcy cases there is the chance for recovery of a debt owed to you. For instance, if there are assets available for creditors or a stream of payments being made by the debtor, there is a good chance for some recovery. Examples include Chapter 7, Chapter 13, and Chapter 11 bankruptcy cases. 


In an asset Chapter 7 case, the bankruptcy trustee has found assets that he or she intends to liquidate and pay to creditors. On the other hand, a Chapter 13 case typically involves the debtor paying his or her net disposable income into a Chapter 13 “plan” that will reorganize the debtor over 3 to 5 years. A Chapter 11 case is a reorganization often employed by large companies where payments are made to creditors of the bankrupt debtor to allow for a fresh start to the company as it emerges from bankruptcy. 


In all of these cases there is a requirement for creditors who desire to share in payments from the debtor. Accordingly, a Proof of Claim must be filed with the clerk of the court by a date certain for creditors to share in the “wealth” of the debtor.


Bankruptcy Rule 3002
Fortunately, there are guidelines to assist creditors and their counsel when facing the prospect of filing a Proof of Claim in a bankruptcy case. Federal Rule of Bankruptcy Procedure 3002 dictates the procedure to follow when filing a claim. It states, in part:

Rule 3002. Filing Proof of Claim or Interest
(a) Necessity for Filing. A secured creditor, unsecured creditor or equity security holder must file a proof of claim or interest for the claim or interest to be allowed, except as provided in Rules 1019(3), 3003, 3004, and 3005. A lien that secures a claim against the debtor is not void due only to the failure of any entity to file a proof of claim.

The mechanics of preparing and filing a Proof of Claim are not difficult. One only needs to locate the proper form, prepare the claim form, attach supporting documents, and file the claim before the deadline. 


Proof of Claim Form
A Proof of Claim is filed with the clerk of the bankruptcy court. It includes basic information about the nature, extent and amount of the claim being made against the debtor. The claim must be filed prior to the specified “bar date.” In most circumstances, a creditor or claimant will receive a notice from the clerk of the bankruptcy court of the filing of a bankruptcy case, which includes the deadline for filing a Proof of Claim. “Wells Fargo wagon is a comin’ now……”


However, the typical Chapter 7 bankruptcy case will not include a deadline for filing a claim, because most Chapter 7 cases are “no asset” cases, meaning there is no anticipated distribution and no claims are required. If an asset is discovered during the administration of a Chapter 7 case, a separate notice is sent out to all listed creditors and parties in interest. The notice sets the deadlines for filing the Proof of Claim.


In Chapter 13 cases, the notice of bankruptcy will include a deadline for filing a Proof of Claim. In Chapter 11 cases, creditors and parties in interest receive a specific notice of the deadline for filing a Proof of Claim. In all of these situations, it is imperative to know the deadline and file your Proof of Claim. Failure to file the claim bars any recovery. 


Official Form 410 is the uniform Proof of Claim form.4 The form is mostly self-explanatory and gives the claimant a list of check boxes and blank spaces to document the nature, extent and amount of the claim. A few common questions may arise when completing this form. 


First, you will have to assess whether your claim is secured or unsecured? If you have a lien on assets of the debtor you will want to file your claim as “secured.” In this case, you will need to list the type of collateral securing the claim (e.g. real estate, motor vehicle, or other type of property). Additionally, a claimant will want to attach to the claim any relevant documents showing the existence and perfection of the lien.


Unsubstantiated claims of secured creditor status are often objected to in the process of administering a bankruptcy estate. 


If a claim is not secured, it is filed as “unsecured.” Most claims are unsecured. However, there is a priority of unsecured claims. If your claim is on the list of “priority claims” as defined in the bankruptcy code, it may be entitled to payment ahead of other creditors.5 One common category of priority unsecured claims are those claims made for child support or maintenance. Other common examples are claims for unpaid wages or commissions, debts for income taxes, excise taxes and payments to employee benefit plans, and claims for wrongful death due to intoxicated driving. 


If your claim is not secured and not a priority claim, it is known as a general unsecured claim. Most claims are general unsecured claims and it is common for these types of claims to receive less than 100% of the amount of their claim. Nonetheless, something is more than nothing, and failing to file a claim at all bars any recovery from the bankruptcy estate. Even a bare bones Chapter 13 case will typically pay at least 10% to general unsecured claimants. So that $15,000 in attorney fees may only garner $1,500 from the bankruptcy, but is still worth the effort to file a claim. “But it could be…something special.”


Late Filed Claims and Special Cases
Late filed claims are typically not permitted.6 Bankruptcy Rule 3002 provides that a claim must be timely filed in a Chapter 7 and Chapter 13 case. There is no exception in the rules that extends that deadline. 


However, in Chapter 11 cases only, there are circumstances where a late filed claim may be allowed. One such instance is excusable neglect. The topic is complex and there are many court opinions either granting it or denying said exception. One frequent application of this principle is where the creditor never received notice of the deadlines. Evidence to support that claim might include the debtor’s schedules and lists of creditors that omitted the creditor’s claims. How would a creditor get notice if they are not listed in the bankruptcy papers? Therefore, the neglect to file the claim is excusable.


Excusable neglect is not allowed in Chapter 13 cases. Therefore, the claim must be filed on or before the claim’s bar date. In the case of In re Tench, the Bankruptcy Appellate Panel for the Sixth Circuit reversed a lower court decision that allowed the late filed claim.7 The court found that no such provisions exist in the rules for allowing Chapter 13 late-filed claims, and specifically that the concept of excusable neglect was inapplicable here.


Late filed claims in Chapter 7 cases are also barred, however, the bar only applies to participation in the administration of the estate where there is no surplus. In the rare event that a Chapter 7 estate has more than enough funds to pay all of the timely filed claims, then there may be a chance for recovery for filers of late filed claims. To share in that pool of assets, the claim needs to be filed, though late, or there can be no recovery. 


In sum, it is important to note bankruptcy deadlines and file any claims on time. If you get wind of a bankruptcy filing, but no official notice, go to the clerk of the court website to gather the necessary information regarding the filing. Better still, file a Request for Notices with the clerk of the court, which should assure that you receive all notices. Ultimately, there is no substitute for knowing your deadlines and filing a timely proof of claim. Failure to do so can be fatal to sharing in any recovery through the bankruptcy case, and can usually be avoided by due diligence.

1. The burden of proof falls to the plaintiff, claimant, or petitioner.

2. See Understanding the Automatic Stay of Bankruptcy for the General Practitioner, Arthur W. Rummler, DCBA Brief Volume 22, available at

3. See 11 U.S.C. § 523(a).

4. See

5. See 11 U.S.C. § 507.

6. See 11 U.S.C. § 502(a)(9).

7. See No. 15-8026 (B.A.P. 6th Cir. May 11, 2016).

Arthur Rummler is a sole practitioner with an office in Glen Ellyn, Illinois. He concentrates his practice in all phases of bankruptcy law and creditor/debtor matters. Mr. Rummler is a 1987 graduate of the University of Michigan Ross School of Business Administration and a 1991 graduate of the Chicago-Kent College of Law.  He started representing consumer bankruptcy clients in 1992 and later expanded to representing Chapter 7 Trustees, creditors and small businesses.