It’s a simple truth that Chapter 13 Las Vegas bankruptcies are more complicated than Chapter 7 bankruptcies. For one thing, Chapter 13 cases involve more paperwork, which makes sense because the debtor creates and follows a repayment plan for up to five years. One document you may run across is a “proof of claim,” which is simply a form creditors send to the bankruptcy court and the trustee to demonstrate that they rightfully own one or more debts that you listed on your bankruptcy petition and are entitled to receive payment from the trustee. A similar document that you might come across is a “notice of transfer of claim.” What’s the difference between the two?
The proof of claim is filed by the original creditor while a notice of transfer of is filed by subsequent creditors. Frequently, banks and other creditors will file proofs of claim when they find out one of their debtors is in Chapter 13, but then they will sell the debt to someone else. Sometimes it’s just a part of how banks work; other times, large banks specifically sell their assets in Chapter 13 to collection companies at a substantial discount. The benefits to the original creditor are that it doesn’t have to worry about taking a charge-off on discharged debts later on, and it doesn’t have to worry about debtors who are unable to complete the Chapter 13 plan and either file for a hardship discharge or convert their cases to Chapter 7. Once the collection company buys the debt, it must tell the bankruptcy court, the trustee, and you that it’s entitled to repayment under your Chapter 13 plan. It does so by filing the notice of transfer of claim.
So you’ve received this notice, what do you do? Tell your lawyer about it, but otherwise nothing in most circumstances. The bank’s decision to sell your debt has no bearing on you or your bankruptcy. However, it’s worthwhile to carefully review the proofs of claim and notices of transfer of claims in your Chapter 13 bankruptcy. Some claims may’ve lapsed due to a statute of limitations, others are duplicated claims (and you don’t want to make duplicate payments), some claims are for the wrong cases, and others are just plain wrong. Most of the time, though, this isn’t the case, especially once your repayment plan is underway.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.