PCS Bankruptcy Stay & Proof of Claim 3 — Questions and Answers
Question 1: A debtor files Chapter 7 and lists a medical debt. The creditor is not notified because the debtor forgot to include them. Under the 'no-asset' rule, what typically happens to this debt?
- It survives discharge because no notice was given
- It is still discharged in a no-asset case even without notice (Correct answer)
- The creditor can obtain a court order to reinstate collection
- The creditor must file a late claim within 30 days of learning of the case
Correct answer: It is still discharged in a no-asset case even without notice
In a no-asset Chapter 7 case, most courts hold that an unscheduled debt is still discharged because there were no assets from which the creditor could have recovered anyway.
Question 2: Which section of the Bankruptcy Code governs the filing and allowance of proofs of claim?
- 11 U.S.C. § 341
- 11 U.S.C. § 362
- 11 U.S.C. § 502 (Correct answer)
- 11 U.S.C. § 727
Correct answer: 11 U.S.C. § 502
11 U.S.C. § 502 governs the allowance and disallowance of claims against the bankruptcy estate.
Question 3: The co-debtor stay in Chapter 13 protects:
- Only spouses of the debtor on joint accounts
- Consumer co-debtors (co-signers) from collection on consumer debts (Correct answer)
- Business guarantors on commercial loans
- All third parties who owe money to the same creditor
Correct answer: Consumer co-debtors (co-signers) from collection on consumer debts
The co-debtor stay in Chapter 13 (11 U.S.C. § 1301) specifically protects individual co-debtors on consumer debts from collection while the plan is in effect.
Question 4: A creditor receives a discharge injunction violation letter. This means the creditor allegedly continued collecting on a debt that was:
- In dispute under the FDCPA
- Subject to a repayment agreement
- Discharged by the bankruptcy court's order (Correct answer)
- Listed incorrectly on the credit report
Correct answer: Discharged by the bankruptcy court's order
A discharge injunction replaces the automatic stay after the case closes, permanently prohibiting collection of discharged debts.
Question 5: What information is NOT typically required on a standard proof of claim form (Official Form 410)?
- The amount of the claim as of the petition date
- The basis for the claim
- The debtor's Social Security number (Correct answer)
- Whether the claim is secured or unsecured
Correct answer: The debtor's Social Security number
A proof of claim requires the creditor's information and claim details, not the debtor's Social Security number, which is a privacy-protected identifier.
Question 6: When a bankruptcy petition is filed, the automatic stay halts which of the following actions by a creditor?
- Reporting accurate delinquency data to credit bureaus
- Sending a 30-day validation notice under FDCPA
- Enforcing a pre-petition wage garnishment (Correct answer)
- Calculating post-petition interest internally
Correct answer: Enforcing a pre-petition wage garnishment
The automatic stay stops enforcement of pre-petition wage garnishments, as they constitute acts to collect or enforce a pre-petition claim.
Question 7: A Chapter 11 plan of reorganization is confirmed. A creditor did not object. What is the legal effect on that creditor's pre-petition claim?
- The claim is preserved at full value for future collection
- The claim is treated as specified in the confirmed plan and is binding (Correct answer)
- The creditor retains all state-law remedies regardless of the plan
- The creditor can negotiate separately with the debtor after confirmation
Correct answer: The claim is treated as specified in the confirmed plan and is binding
A confirmed Chapter 11 plan is binding on all creditors, including those who did not object, and their claims are treated as provided in the plan.
PCS Bankruptcy Stay & Proof of Claim 3
A debtor files Chapter 7 and lists a medical debt.
The creditor is not notified because the debtor forgot to include them.
Under the 'no-asset' rule, what typically happens to this debt?