Tennessee residents who believe bankruptcy is the option that best suits them may be interested to know that according to a bankruptcy court ruling, secured creditors are not allowed to file proofs of claim late. Generally, only unsecured creditors are required to file proofs of claim in order to receive payments under a Chapter 13 bankruptcy plan. Nevertheless, if secured creditors want to receive payments as well, then they must file their proofs of claim in a timely manner.
In the case that led to this ruling, a married couple owed back property taxes to a secured creditor that had a lien on their home. When the judge asked the couple if they wanted to file a proof of claim for the creditor, they chose not to do so. The company to which the couple owed the back taxes then asked to file a proof of claim even though the bankruptcy case was already being reviewed in court. The judge ruled that late filings would not be accepted because if secured creditors want to receive payments they must file proofs of claim, and the creditor in this case did not meet the requirements for an exemption to the late rule.
When the couple was asked by the judge how they planned to pay the secured creditor back, they said they would wait until later when they could deal with it. The court approved their bankruptcy plan, which did not include the payment to the secured creditor of the back property taxes despite the lien remaining on their home.
Chapter 13 might be an option for individuals who are overwhelmed by debt but who want to keep their assets. People who are in this situation might want to meet with an attorney to learn whether they qualify for this type of relief.