A recent issue has arisen pertaining to objections to Proof of Claims in bankruptcy cases filed in the Western District of North Carolina. RMAI recommends that our members consult with their legal counsel on how best to address the issue as it pertains to their organizations.
Specifically, there has been an increase in the number of objections to claims being filed in cases where there is a joint bankruptcy and particularly in cases where the property is held by the tenancy in the entireties. The debtors’ basis for the objection to the claim is that the creditor is not providing clear proof of which of the debtors is liable on the debt. Although many creditors attach documents purporting to show liability or a statement of which debtor is liable, debtors counsel has been able to convince the court to sustain the objections and obtain an award of attorney fees for the time spend researching the liability on the underlying obligation on the claim.
As we are all aware the debtors have a duty to properly list their creditors, and which parties are liable. The schedules are filed under oath. Nevertheless, currently the Western District of North Carolina, Western Division (Statesboro) has now shifted that burden to the creditors. As of this alert, we are seeing this issue only in the above referenced court, but the possibility strongly exists that other Debtor’s counsel will attempt to raise these types of objections.
This Member Alert is intended for members of the Receivables Management Association International, is for informational purposes only, and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.