In In the Matter of Rafael Antonio Ramirez Flores, Debtor filed a petition for relief under Chapter 13 bankruptcy. Secured creditor, Gaeta Auto Sales (“GAS”), failed to file a proof of claim or object despite receiving notice of Flores’ bankruptcy. The debtor’s plan was confirmed. Later, the Chapter 13 Trustee filed a motion to modify the confirmed bankruptcy plan to pay secured creditor GAS nothing because they failed to file a claim to assert: (1) how much they are owed; and (2) their lien on Flores’ vehicle. Again, there were no objections to the motion, and the Court granted the Trustee’s motion. GAS filed a motion for relief from the automatic stay. The issue the Court then had to answer was can the sleeping creditor seek relief from the automatic stay when it failed to file a proof of claim and, as a result, did not receive a distribution.
The Court relied on its previous decision in Matter of Jones, where it held that a creditor who fails to file a timely proof of claim and, as a result, does not receive a distribution, has no cause to seek relief from the automatic stay. The Court held that Jones gave force to the provisions of the bankruptcy code and rules concerning the need to files claims and the effect of confirming a plan.
Through this holding, the Court emphasizes the power of confirmation of a bankruptcy plan and that Creditors need to take an active role in protecting their claims. Creditors cannot rely on obtaining relief from the automatic stay after failing: (1) to file a proof of claim; or (2) to object to the confirmation of the Debtor’s bankruptcy plan.
Beckman Lawson would like the opportunity to help you through this process and protect your claim! Contact one of our creditor’s rights attorneys today.