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Ohio court rules against late claims in Chapter 13

An Ohio bankruptcy court has made a very specific, but important, ruling about Chapter 13 bankruptcies — one that could affect many bankruptcy procedures in the future. Under a Chapter 13 bankruptcy, a secured creditor can file a claim against party seeking a discharge, but they should do so by the deadline laid out when they receive notice of the bankruptcy.

Now, an Ohio court has put their foot down and drawn a hard line, ruling that creditors who do not file claims in the proper timeframe risk forfeiting their claims altogether.

The issue arose when a couple filed for Chapter 13 bankruptcy while owing property taxes. The company holding the debt failed to file a claim against the couple for the debt, despite receiving proper notification of the deadlines. When the deadline came and went, the court ruled that the company could no longer file a claim to receive payment from the Chapter 13 repayment plan.

However, it is important to note that the company had already placed a lien on the home of the couple, and that lien will likely remain even after the completion of the Chapter 13 discharge. Still, this marks an important step forward for consumers in Ohio who are considering using a Chapter 13 discharge to get rid of debt.

If you think that Chapter 13 might be the right tool for your debt issues, be suer to consult with an experienced bankruptcy attorney. Bankruptcies are complicated procedures that must be executed very carefully to maximize efficiency. Proper legal counsel can help guide you through the process while being mindful to keep your rights and interests protected.

Source: Bloomberg Business News, "Secured Creditor Can’t File Late Claim in Chapter 13," Daniel Gill, June 28, 2017

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