Repossessed car and payment of late filed claim

In re Ayres-Haley; Case No. 07-10314-SSM; January 16, 2008

Ms. Ayres-Haley filed a Chapter 13 plan whereby she was to pay the car lender, Americredit, the regular contractual rate outside of the plan and the plan provided for 100% payment of unsecured creditors and was to be funded with the sale of real estate.  Ms. Ayres-Haley, the Debtor, was unable to keep up with the car payments and eventually Americredit filed a Motion for Relief from the Automatic Stay to repossess the collateral, which they did.

Meanwhile, the Debtor sold the real estate, the Trustee administered the estate and returned the excess to the Debtor.  Then the Trustee closed the case.  After all of this, Americredit filed an amended proof of claim for the deficiency balance and demanded the Trustee recoup the money from the Debtor.  This hearing was brought on the Trustee’s objection to the amended proof of claim.

The court noted that a creditor seeking to be paid in a Chapter 13 case is required to file a proof of claim by the claims bar date.  FRBP 3002.  The court noted that treatment of all claims is governed by the Plan.  In this case, the plan provided that the Debtor was to make the contractual payments going forward.  Even though Americredit had an allowed secured claim, the trustee had no responsibility to pay anything more than the prepetition arrears. The court notes that it is common for courts to freely allow amendments to proofs of claim after the bar date has passed, for example, to cure defects or to describe the claim with greater particularity, so long as the amendment will not cause undue prejudice to the debtor or other creditors.  The court, however, decides that a different result obtains when the late-filed amendment will prejudice administration of the estate.

But all was not lost for Americredit, the court pointed out that, because the debtor treated the Americredit claim under §1322(b)(5), such debts will not have been fully paid upon the completion of the plan and are excluded from the discharge upon the completion of plan payments.  §1328(a)(1).  The court says that an Adversary Proceeding would need to be filed to determine the dischargeability and refused to make a ruling on the dischargeeability of the debt.

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