chapter 13 and debts beyond sol

[carolen]

Does anyone have experience with filing chapter 13 (because of law suit) that was served 2 weeks prior to the 4 year statute of limitations being up. Attorney says we don't pass Chapter 7 means test. My other credit cards have also just gone beyond the 4 year mark. Will they be included for payment?

[justbroke]

I have some experience in this and an opinion, of course. I filed a Chapter 13 back in 2008. American Express filed a claim in my Chapter 13 that was over 20 years old. I initially objected and asked that the claim be expunged. The judge politely (in a consultative manner) told me to just let it stay there to make sure that, even though it wasn't mine, it was discharged!

Nothing prohibits a creditor from filing a claim in a bankruptcy. With some limited exceptions, even a discharged creditor's debt can have a claim filed (e.g. a discharged but secured debt for which the creditor had not yet taken any action can file a secured claim). You can object to claims if you have a legal reason for the object, such as expiration of the time to collect a debt under the SOL. If the creditor opposes your objection then you may need a hearing to present evidence that the claim should be disallowed.

Unless you need to payback 100% of the allowed claims -- which happens in few cases (< 5% maybe) -- your payment is based on your expenses and your disposable monthly income (DMI). Your DMI does not change based on the number of unsecured creditors that have filed. You do not need to worry about which creditors file when you are not required to be in a 100% plan. I would still file objections to claims where there are legal issues regarding the validity of the claim itself.

[frogger]

Nothing prohibits a creditor from filing a claim in a bankruptcy. With some limited exceptions, even a discharged creditor's debt can have a claim filed (e.g. a discharged but secured debt for which the creditor had not yet taken any action can file a secured claim). You can object to claims if you have a legal reason for the object, such as expiration of the time to collect a debt under the SOL.

That was my understanding as well, however in my opinion, things have changed. I have filed hundreds of claims that were beyond the SOL, but several bk judges have started kicking them out due to the SOL. I have a ruling (somewhere on my computer) that the judge is going by that states (in a nutshell) that any claim filed that was beyond the SOL directly impacts the payment that could be due to accounts that were within the SOL, therefore not fair to the creditors that have current, within stats, debt. The ruling states that debt past the SOL was not collectable and all claims like that would be rejected in order to be fair to creditors that have collectable debt.

(And I know that even debts that are out of the SOL are collectable, you just can not take legal action.)

[justbroke]

That is true that SOL accounts are not legally enforceable. As you and I have personally witnessed, that doesn't seem to stop these creditors from still filing claims. If you have an objection to a claim that should be disallowed, I would still object to the claim on the basis that it is not an allowable claim. If we don't police these claims, the creditors will continue to file claims in bankruptcy cases when their debt is not legally enforceable.

It's unfortunate, but many thousands of claims are filed in cases where they should not be filed (because they are not allowable claims due to some legal status such as the statue of limitations). There was a recent case where the U.S. Trustee went after Capital One for doing such in large volumes, including debts that were previously discharged. The UST has complained that they are making money where they should not be making money.

What's not so funny about Capital One is that they were caught in 2008 and in 2013! They will never learn. We must be vigilant!

http://www.justice.gov/ust/eo/public_affairs/press/docs/2013/pr20130605.htm

http://www.law360.com/articles/71528/capital-one-settles-u-s-trustee-suit-over-bad-claims