by “If a creditor wishes to participate in the distribution of a debtor’s assets under a Chapter 13 plan, it must file a timely proof of claim.” Spokane Law Enforcement Fed’l Credit Union v. Barker, No. 14-60028 (9th Cir. Oct. 27, 2016).
Marcella Lee Barker filed her chapter 13 petition, and the Spokane Law Enforcement Federal Credit Union was notified of the filing and the deadline for filing a proof of claim. In the schedules accompanying her proposed plan, Ms. Barker listed a secured loan from the Credit Union in the amount of over $6,600 and an unsecured loan in the amount of over $47,000. Four months after the filing deadline had elapsed, the Credit Union filed its proofs of claim. The Credit Union sought an order from the bankruptcy court to allow the claims. The court denied the motion and disallowed the claims as untimely. The BAP for the Ninth Circuit affirmed.
The Credit Union presented three theories on appeal to the Ninth Circuit. It argued that Ms. Barker’s schedules were a “judicial admission” of the debts for which she should be held accountable; that the schedules were an “informal proof of claim” as permitted by the Ninth Circuit; or, in the alternative, that the debtor had filed a proof of claim on the Credit Union’s behalf as permitted by Bankruptcy Rules and Code.
As to the argument that Ms. Barker’s “judicial admission” imposed an obligation on her to pay the debts listed in her schedules, the court disagreed. The schedules serve bankruptcy purposes, such as providing the information necessary for the court to determine whether the debtor is entitled to bankruptcy relief, and, if so, under what chapter. What the bankruptcy schedules do not do, however, is relieve the creditor of its affirmative obligation to file a proof of claim.
Nor did Ms. Barker’s listing of the debts constitute the creditor’s “informal” proof of claim. The Ninth Circuit allows a document to qualify as an informal proof of claim if it “state[s] an explicit demand showing the nature and amount of the claim against the estate,” and . . . “evidence[s] an intent to hold the debtor liable.” These requirements demand that the creditor take some affirmative action to show its intent to assert its claim. The debtor’s bankruptcy schedules do not meet that requirement.
Nor do the debtor’s schedules constitute a proof of claim filed by the debtor on behalf of the creditor as contemplated by Rule 3004 and section 501(c). They were not filed within the time frame mandated by Rule 3004, nor does the mandated filing of schedules equate with fulfilling the additional action of filing a proof of claim on behalf of a creditor.
Finally, the court found that the timing rules for filing a proof of claim are “rigid” and the bankruptcy lacks the power to extend them for equitable reasons not specified in the Rules or the Code. Permitting late proofs of claim would thwart the purpose of chapter 13 to firmly establish and deal with the debtor’s assets and liabilities.