Can You Object to a Creditor Claim in Bankruptcy?

 Posted on January 30, 2025 in Bankruptcy

For people unfamiliar with the bankruptcy process, it may seem complex and unapproachable. Yet it is possible to understand how bankruptcy will affect you and how you can protect yourself. One thing to keep in mind is that in bankruptcy creditors will seek to recover the debt you owe them within the bankruptcy framework. The process by which creditors do so begins by filing what is called a "proof of claim." 

Much like it sounds, a proof of claim lays out the proof for the claim that the creditor wants to recover from the bankruptcy estate. It is possible to object to a creditor claim depending on the facts of your case, and an experienced Galveston, TX bankruptcy attorney can object to creditor claims on your behalf. 

What Is a Proof of Claim?

A proof of claim is a form that creditors file primarily in Chapter 13 bankruptcy and occasionally in Chapter 7 bankruptcy. Creditors can also object to claims in Chapter 11 bankruptcy, which is primarily but not entirely used by businesses. By filing a proof of claim, creditors establish evidence of a valid claim against the bankruptcy estate. Because most debtors in Chapter 7 bankruptcy do not have a great deal of non-exempt assets, meaning assets that become part of the bankruptcy estate, most Chapter 7 cases are "no asset" matters that do not require a creditor to file a proof of claim. 

Reasons for Objecting to a Proof of Claim

If no one objects to a claim, the claim stands. Once the creditor files the claim, a bankruptcy "party of interest" in the case can bring a motion to object to the claim. This can be anyone who may be affected by a faulty proof of claim, such as the debtor, trustee, or another creditor. There are a few reasons to object, including: 

Claim is Unenforceable

A claim is unenforceable if, for example, the statute of limitations has passed allowing the creditor to collect on the debt.

Procedural and Content Errors

It is possible to object to a claim on the grounds that it is procedurally flawed, meaning that the creditor did not follow proper procedure filing the claim, or that it contains incorrect information. This includes situations such as if the claim was filed after the court’s deadline to do so, if the creditor did not attach proper documentation to prove that the debtor owns the claim, or if the creditor filed the claim more than once.

Insider Claim

If the bankruptcy was filed by an organization, an insider in that organization such as an officer, director or attorney cannot file a claim against the bankruptcy estate, with exceptions for certain types of services. 

Contact a Harris County, TX Bankruptcy Attorney

Bankruptcy is a complex legal process that requires skilled representation, yet it does not have to be intimidating. At The Fealy Law Firm, PC, our experienced Fort Bend County, TX bankruptcy attorney can represent you throughout the bankruptcy proceeding, from filing for bankruptcy to objecting to creditor claims. Attorney Fealy helps good people through hard times. Call the office for a complimentary and confidential consultation at 713-526-5220.