Ruling on an issue that has “has divided and confounded bankruptcy courts for years,” Bankruptcy Judge Scott M. Grossman of Fort Lauderdale, Fla., decided that the “notice” referred to in Bankruptcy Rule 3002(c)(7) about the bar date for proofs of claim is notice of the bar date, not notice about the case.

The husband had borrowed $40,000 from a lender. The wife had a separate $55,000 loan from the same lender. The lender assigned the loan to a party whom we shall refer to as the assignee. The lender gave notice of the assignment to the couple.

After the assignee began collection efforts, the couple filed a joint chapter 13 petition. The couple scheduled the lender but not the assignee. Therefore, notice of the filing and the claims-filing bar date went to the original lender, not to the assignee as the holder of the claims.

Without notice of the filing, the assignee happened to run a credit report on the husband, learning that he was in chapter 13. Before the bar date, the assignee filed a claim for the husband’s $40,000 loan, but the claim listed the names of both husband and wife.

After the bar date, the assignee sent collection notices to the wife, who then informed the lender that she too was in chapter 13. Promptly, the lender filed a proof of claim against the wife for her $55,000 loan. The lender also filed a motion under Rule 3002(c)(7) for an extension of the bar date, because the proof of claim was filed after the bar date.

The couple objected to the allowance of the $55,000 claim against the wife, contending it was untimely. The debtors took the position that the first claim listing the names of both debtors showed that the assignee had notice of the bankruptcy before the bar date.

The assignee’s motion called on Judge Grossman to interpret Rule 3002(c)(7), titled, “Extending the Time to File,” which provides:

On a creditor’s motion filed before or after the time to file a proof of claim has expired, the court may extend the time to file by no more than 60 days from the date of its order. The motion may be granted if the court finds that the notice was insufficient to give the creditor a reasonable time to file.

Judge Grossman stated the issue: “[I]s . . . ‘the notice’ referred to in Rule 3002(c)(7) . . . the actual notice of the time to file a proof of claim that was sent to creditors or just notice in general of the debtors’ bankruptcy case filing?”

Quickly to the point, Judge Grossman held “that ‘the notice’ means the actual notice of the time to file a proof of claim and not notice in general that a debtor has filed for bankruptcy,” based “on the thorough analysis” by Bankruptcy Judge Brian C. Walsh of St. Louis in In re JC Farms, LLC, 2024 WL 3352120 (Bankr. E.D. Mo. 2024).

Although the assignee may have known that both husband and wife were in chapter 13, Judge Grossman held that the assignee “did not receive the notice of the deadline to file a proof of claim” and that any notice about the case “was insufficient to give it a reasonable time to file.”

Judge Grossman made the claim against the wife timely by extending the time for filing the claim to the date on which the assignee had filed the claim.