September 10, 2018
Along with other changes to the bankruptcy form plan that went in to effect last December, Rule 3002, governing the filing of proofs of claim was amended to shorten the time when claims had to be filed in Chapter 13 bankruptcy cases. Rule 3002 now requires that in most circumstance, secured and unsecured creditors must file their proof of claim within 70 days after the bankruptcy case is filed. Previously, the filing deadline was 90 days after the meeting of creditors. As the meeting of creditors required 21 days’ notice, associations had over 110 days in which to learn of a bankruptcy and take action.
If your claim is not filed, it is highly unlikely you will receive payment under the bankruptcy plan. Your sole remedy may be foreclosure.
With the reduction of time within which to file a claim and be treated under the plan, it is more important than ever to get timely notice of a bankruptcy filings, and to forward that notice on to your attorney. Even when a property owner is not currently delinquent, their bankruptcy plan may affect post-petition assessments, so it is always important to get timely review of any bankruptcy notices you receive.
The 70 day deadline for filing claims is effective even if notice of the bankruptcy filing is sent to the wrong address. Debtors often send notice of their bankruptcy to lock boxes, onsite clubhouse addresses, and even old Board members. What can you do?
First, the bankruptcy court allows you to register a preferred address for your association, or a preferred email address through its Bankruptcy Noticing Center. Management companies can also take advantage of this as they are often listed as the creditor instead of the association. Registration ensures that regardless of what address the debtor lists for the association or management, it is sent to the preferred address.
Second, you must train the individual receiving these notice what to do once they are received. The clock is already ticking, so these notices should be addressed as soon as possible. You also must remember when that designated individual leaves your organization, to update the registered address or email if it was personal. Should you need assistance with designating an individual and address, please do not hesitate to contact me.