In another Blog post, I talk about the recent Supreme Court Case of Travelers. That case may well open the doors to using non-bankruptcy laws to defeat proof of claims filed in Chapter 13 cases.
Typically, if a creditor files suit outside of Bankruptcy for a stale debt or where they lack the proper assignment, the debtor could bring a counterclaim or separate lawsuit under the FDCPA and RFDCPA for suing on a time barred debt and lack of standing. Pursuant to Travelers, it now appears that a bankrupt debtor still maintain this right and the bankruptcy filing did not take it away.
The underlying rational in Travelers is that nothing in the Bankruptcy Code forbids attorney fees in the claims objection process. Likewise, nothing in the Bankruptcy Code forbids counterclaims under the proof of claims process. Any argument by a creditor concerning the “comprehensive scheme of rights and remedies provided by bankruptcy law by implication” is now no different than the analysis of the Fobian case(long standing 9th circuit case concerning attorney fees on proof of claims) which was overturned by Travelers.
So beware. Should you find a proof of claim come into your chapter 13 case that you have no idea who the creditor is, chances are you can assert other-non-bankruptcy rights against that creditor and recover any damages arising therefrom.
Written by Michael Doan– Mr. Doan practices on the cutting edge of bankruptcy law, and was the first attorney in the entire Southern District of California to file the very first Chapter 7 Bankruptcy and very first Chapter 13 Bankruptcy under the new Bankruptcy Laws which went into effect on October 17, 2005.
Quality Escondido Bankruptcy Lawyers can be hard to find these days, but over at Doan Law Firm we take pride in the quality of our work and our clients are our number one priority.