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Secured creditors must timely file claims

A Chapter 13 bankruptcy case in South Carolina will give creditors an opportunity to make a claim with the court so that they have a chance to receive payments once a court approves a bankruptcy plan. Late filers, however, could miss their chance to collect payments. A court in another state ruled in June against a creditor holding a tax lien against a couple's house because of a late claim filing.

The money owed for property taxes was not a secret during the bankruptcy proceedings. Notice had been sent to the creditor informing the entity of the couple's bankruptcy filing and the deadline for making claims. Although the lien holder did not complete any paperwork, the court asked the debtors if they wished to include the unpaid taxes in the plan. They declined, and the court went on to approve a payment plan that did not address the taxes although the court informed the couple that the taxes would remain payable.

Once the holder of the tax lien finally prepared the paperwork, the court decided that the organization had not met any of the conditions that would allow for a late claim. This legal ruling effectively delays the creditor from taking action to collect the tax money until the bankruptcy is completed.

People wishing to know more about managing debts with a Chapter 13 bankruptcy could speak with an attorney. They could learn about the types of debts that might be addressed and how to pursue goals like lowering loan payments or saving a home. This effort could halt collection attempts at least temporarily.

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