On a question where the courts are divided, Bankruptcy Judge Mary Ann Whipple of Toledo, Ohio, took sides with the Seventh Circuit and held that the claim filing deadline in Bankruptcy Rule 3002(c) applies to secured creditors in chapter 13 cases, even though secured creditors are not required to file claims in chapter 13 cases.
In chapters 7 and 13, secured creditors are not required to file claims. After bankruptcy, they may enforce their liens against the debtor’s property, although they would have waived any unsecured deficiency claims and retained no claims against the debtor personally. Secured creditors will often refrain from filing claims to avoid submitting to the jurisdiction of the bankruptcy court and the possibility of having consented to entry of a final order in bankruptcy court.
In In re Pajian, 785 F.3d 1161 (7th Cir. 2015), the bankruptcy judge believed that a secured creditor could file a claim in a chapter 13 case at any time before confirmation. On direct appeal, the Seventh Circuit reversed in May 2015, holding that secured creditors must file claims in chapter 13 cases by the same deadline that applies to unsecured creditors.
The identical issue arose in Judge Whipple’s court, where the secured creditor failed to file a claim by the deadline established by Rule 3002(c). She cited several bankruptcy court decisions, all before Pajian, that held that the filing deadline does not apply to secured creditors “since secured creditors are not mentioned in Rule 3002(a).”
In her Feb. 6 opinion, Judge Whipple was persuaded by the Seventh Circuit’s conclusion that “principles of sound judicial administration” call for making the deadline applicable to secured claims, otherwise a secured creditor could “swoop in at the last minute and upend a carefully constructed payment schedule.”
Judge Whipple was also swayed by Rule 3004, which permits a debtor to file a claim if the creditor has not filed a claim by the deadline. She noted that Rule 3004 makes no distinction between secured and unsecured claims. If there were no deadline for secured claims, then an occasion would never arise that would allow a debtor to file a claim for a secured creditor.