proof of claim

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Before getting into the meat and potatoes of today’s post, I want to acknowledge a comment by a fellow bankruptcy attorney.  At a recent continuing legal education presentation she asked why I hadn’t been regularly posting, and encouraged me to post more frequently.  I must confess that since I hadn’t heard much from my readership, I was a bit discouraged.  Her words put a fire under my seat — which is better than the fire I get from the spicy food I foolishly love — so I will try to be more regular (daily prune juice is helping).

In any event, I recently answered a couple of questions posed by a fellow bankruptcy attorney — not the same one mentioned in the previous paragraph — and thought you might find the exchange interesting.  The questions were:

Debtor was sued in Superior Court and a judgment was entered relating to the repayment of unemployment claims in 2010 to the Employment Development Department – State of California.

Q1: Is this a priority claim?

Q2: If the Debtor’s chapter 13 plan provides for this claim but the EDD does not file a proof of claim, will the claim be paid by the trustee?  If not, will the debt be discharged?
Continue Reading The Treatment Of Unemployment Taxes In Bankruptcy

The answer differs depending on the nature of the debt and under which chapter the bankruptcy case was filed.

I.          The Key Exception To Discharge

The key provision of the Bankruptcy Code that we use to answer the question is 11 U.S.C. § 523(a)(3), which states (with emphasis added):

A dischargeunder section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt— . . . neither listed nor scheduled under section 521 (a)(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit—

(A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; or

(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request;

If you’re not used to reading statutory language you may naturally ask:  What does all of this mean?  One thing is clear:  this statutory provision concerns debts that were “neither listed nor scheduled” in the bankruptcy papers “in time to permit . . .”  But to permit what?  There are two things that the creditor would have been able to do in a timely fashion if the debt had been properly scheduled, but cannot because of the oversight.
Continue Reading What Happens If I Forgot To List A Creditor In My Bankruptcy Papers?