National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

Proof of claim

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NCBRC and NACBA Stand Firm on Bankruptcy Rights in Duarte v. Hillard

What happens when a creditor misses their deadline but tries to bend the rules to get paid anyway? That’s the central issue in Duarte v. Hillard, a case before the Ninth Circuit Court of Appeals, where the National Consumer Bankruptcy Rights Center (NCBRC) and the National Association of Consumer Bankruptcy Attorneys (NACBA) have stepped in to defend the integrity of the bankruptcy system.

In this appeal, creditor Jerry Duarte argues that even though he failed to file a timely proof of claim in Jenna Denise Hillard’s Chapter 13 bankruptcy case, he should still be entitled to receive payment. His legal argument? That the debtor’s amended bankruptcy schedules and plan should count as an “informal” proof of claim—something the law does not support.

NCBRC and NACBA have filed an amicus brief urging the court to uphold long-standing bankruptcy rules that require creditors to take affirmative steps to preserve their claims. If Duarte’s argument were accepted, it would create uncertainty in the Chapter 13 claims process, undermining the predictability that debtors and creditors rely upon.

The Legal Issues at Stake

At the heart of Duarte v. Hillard is whether a debtor’s amended schedules or Chapter 13 plan can serve as an informal proof of claim for a creditor who failed to meet the deadline. The case challenges:

✅ The clear legal requirement that creditors must file a timely proof of claim under Federal Rule of Bankruptcy Procedure 3002 to receive distributions.
✅ The Ninth Circuit’s prior ruling in Barker v. Spokane Law Enforcement Credit Union, firmly rejected the idea that a debtor’s schedules alone could serve as a Proof of Claim.
✅ The role of Rule 3004, which allows a debtor to file a claim on a creditor’s behalf but does not permit an “informal” filing—contrary to Duarte’s argument.

Allowing a debtor’s schedules or plan to substitute for a creditor’s proof of claim would set a dangerous precedent, potentially forcing debtors to make payments on debts that might otherwise be disallowed or discharged.

Why This Case Matters

The outcome of Duarte v. Hillard could reshape how claims are handled in Chapter 13 cases nationwide. If Duarte prevails, it could weaken bankruptcy protections by shifting responsibility from creditors—who must file claims—to debtors, who may inadvertently give creditors a second chance at getting paid by simply amending their schedules.

By joining this case, NCBRC and NACBA reaffirm their commitment to protecting consumer bankruptcy rights and ensuring the fair and just application of bankruptcy laws.

We will continue to monitor this case closely and provide updates as the Ninth Circuit deliberates. Stay tuned for further developments in this critical battle for bankruptcy fairness.

You can read the amici brief here: Amici Brief in Duarte v Hillard

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Unemployment Overpayment Not a Priority Tax Debt

Kentucky’s Office of Unemployment Insurance’s claim for an overpayment of unemployment compensation benefits was not entitled to priority in the debtor’s chapter 13 case where the nature of the claim was better characterized as a “penalty” than a “tax.” In re Clardy, No. 22-30089 (Bankr. W.D. Ky. Dec. 1, 2022). [Read more…] about Unemployment Overpayment Not a Priority Tax Debt

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Who Would Win in a Fight, Allowed Claim or Confirmed Plan?

The winner? Confirmed plan. Where the mortgagee had notice and opportunity to object to confirmation of the debtor’s Chapter 13 plan providing for mortgage arrears in the amount of approximately half the mortgagee’s allowed proof of claim, the mortgagee could not be heard, at the debtors’ successful completion of their plan, to complain that the debtors still owed pre-petition arrears. In re Edelstein, No. 17-11461 (Bankr. N.D. Ill. Nov. 7, 2022). [Read more…] about Who Would Win in a Fight, Allowed Claim or Confirmed Plan?

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First Circuit Dodges Late-Filed Tax Return Issues

Faced with the question of whether the debtor’s tax debt based on a late-filed tax return was excepted from discharge, the circuit declined to reexamine its holding in Fahey where it applied the strict “one day late” rule, found the debtor waived his argument in support of an objective test that does not consider timing of filing, and instead, held the debtor’s late-filed tax return did not meet Beard’s subjective test for a “return.” In re Kriss, 21-1206 (1st Cir. Nov. 22, 2022). [Read more…] about First Circuit Dodges Late-Filed Tax Return Issues

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Mortgage Creditor Sanctioned for Miscalculating Claim

The debtor was entitled to attorney’s fees and a reduction in the mortgagee’s arrearage claim where the mortgagee failed to reduce the arrearage by the entire amount the debtor had paid in his prior chapter 13 bankruptcy. In re Simmons, No. 22-680 (Bankr. D. S.C. Aug. 31, 2022). [Read more…] about Mortgage Creditor Sanctioned for Miscalculating Claim

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IRS Had No “Substantial Justification” for Challenging Jurisdiction

The IRS had no reasonable basis for challenging the bankruptcy court’s exercise of personal jurisdiction, where it consented to jurisdiction when it filed a claim in the debtor’s chapter 7 bankruptcy, and the debtor notified it of his objection to the claim using the address the IRS provided. For that reason, the debtor was entitled to recover fees and costs associated with litigation of the IRS’s claim. Nicolaus v. United States of America, No. 21-3010 (N.D. Iowa March 8, 2022). [Read more…] about IRS Had No “Substantial Justification” for Challenging Jurisdiction

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The ACA’s Shared Responsibility Payment Is Not a Priority Claim

“The shared responsibility payment is neither ‘a tax on or measured by income or gross Receipts’ nor ‘an excise tax on . . . a transaction’ within the meaning of § 507(a)(8)(A) or (E) of the Bankruptcy Code.” In re Juntoff, 2021 WL 1522206 (Bankr. N.D. Ohio April 15, 2021) (case nos. 1:19-bk-17032, 1:20-bk-13035) (unpublished). [Read more…] about The ACA’s Shared Responsibility Payment Is Not a Priority Claim

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Attorney Fees Intended To Pressure Debtor Unnecessary

The creditor’s attorney fees attributable to its repeated motions to continue foreclosure proceedings during the debtor’s pending bankruptcy cases were unnecessary given that the automatic stay was in place, and the bankruptcy court deducted those fees from the allowed claim. In re Peta, 2021 WL 608233 (Bankr. E.D. Pa., Feb. 10, 2021) (case no. 2:19-bk-13264). [Read more…] about Attorney Fees Intended To Pressure Debtor Unnecessary

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Nebraska Bankruptcy Court Rules §506(b) Is Not A Blank Check for Over-Secured Creditors, Knocks off $38,355.85 of Excessive Fees and Charges

The Bankruptcy Court for the District of Nebraska recently reviewed the reasonableness of the fees claimed by a mortgage creditor on an over-secured loan. Before filing for protection under Chapter 13 of the Bankruptcy Code, the Debtor owned two properties, one residential and the other business, and pledged them as collateral for an SBA loan through the creditor. He subsequently fell behind on payments and was not able to pay the balloon amount. The properties are collectively valued at $220,000.00 and the principal and interest balance at filing was less than $70,000.00. The creditor’s claim also included $13,592.20 for late charges and $41,365.85 for expenses for appraisals, assessments, and other fees. The Debtor objected to the reasonableness of the charges and expenses.

To read more and access the opinion click here.

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Maryland Bankruptcy Court Holds Failure to Produce Writings Doesn’t Invalidate Credit Card Claims

The Bankruptcy Court for the District of Maryland recently ruled whether several claims based on open-ended credit card agreements could be disallowed for failure to provide the Debtor’s documents supporting the claim. The Debtors’ counsel had requested the creditors to deliver copies of the writings on which each of the claims was based and other documents including copies of all monthly statements to copies of all notices of transfer of the account. When the creditors failed to supply the information, the Debtors objected to those claims and asked that they be disallowed.

To read more and access the opinion click here.