What happens if my creditors do not file a claim in my Chapter 13 case? Will I pay out early?

If a creditor does not file a claim in your case, you need to speak with your attorney to determine whether a claim needs to be filed on behalf of the creditor.  If the claim that was not filed is for an auto that you wish to keep or your past due payments on your mortgage, etc., your attorney will most likely advise that a late claim needs to be filed for the creditor.  These are debts that you want to see paid off in your Chapter 13 case.  However, if the claims that were not filed are for unsecured creditors (credit cards, medical bills, finance companies), your attorney will probably advise you that a claim does not need to be filed on behalf of the creditor.

The second part of your question is tricky.Will you pay out early?Not necessarily.If your Chapter 13 plan proposes to pay all of your unsecured creditors at 100%, you will pay out early provided you make all scheduled payments to the Trustee.However, if you are a pro rata case (that is, a case that only pays a small percentage to your unsecured creditors, usually between 0% and 99%), you will not pay out early.In fact, in a pro rata case, unfiled claims can result in a higher dividend than necessary being paid to your unsecured creditors.In cases such as these, it would be wise to ask your attorney if your Chapter 13 plan could be modified to reduce the dividend paid to your unsecured creditors to the amount you are actually required to pay.

Angie Seymour
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Bankruptcy Attorney Serving Augusta, GA