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Bankruptcy Law Blog

Saturday, January 20, 2018

Court Shortens Time Period For Creditors To Make Claims

A college football game has four, fifteen-minute, quarters. College basketball players get two, twenty-minute, halves. Hockey players skate three, twenty-minute, periods. These game clock rules were shaped by tradition, but today are mandated by the governing boards that oversee each sport. The legal world operates in a similar fashion.

Creditors have a certain amount of time to file a claim after a debtor declares bankruptcy. Debtors have a certain period of time in which to respond to a creditor’s claim. Chapter 13 cases last for a specific period. You get the picture.

These legal time limits develop over the years in each local court. Sometimes, the United States Supreme Court will then step in and standardize a certain rule so that it is applicable to all bankruptcy courts across the entire nation. The latest example of this occurred on December 1.

The Supreme Court issued a new rule that says all creditors now have only 70 days to file a claim against someone who has filed for bankruptcy under Chapter 7, in which debtors liquidate assets; Chapter 12, which enables family farmers and fishermen to restructure their finances; or Chapter 13, which is sometimes known as the wage earner’s plan because it enables qualified individual filers to reschedule and make debt payments, allowing them to keep their homes and other property.

This is a big deal. Secured creditors, including mortgage lenders, were previously subject to different or no time limits in different jurisdictions, and other creditors used to have 90 days to file such a claim. Bankruptcies should move a bit faster once creditors, attorneys, and courts get used to this new rule. That’s great news for debtors who benefit from fast and efficient courts.

This rule is going to be especially helpful for debtors who are filing under Chapter 13. Some creditors were waiting until the last minute to make claims, which was delaying the court’s approval of the debtor’s repayment plan that is central to the Chapter 13 process. Now all creditors have to get their claims in right away, so repayment plans will be able to be crafted more quickly and with the knowledge that they won’t have to be trashed at the last minute when some slow-poke creditor finally makes its way to the courthouse.

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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”