Can a debtor object to a proof of claim?

When a creditor wants to assert a right to be paid in a bankruptcy proceeding, it files a proof of claim with the bankruptcy court. In general, these claims are treated as valid unless objected to. Whether the debtor may (or even should) object to a claim depends on the type of bankruptcy case.

Chapter 7 Claims

In chapter 7 bankruptcy, creditors are only instructed to file claims if it appears the case will have assets for the trustee to sell for the benefit of creditors. Many chapter 7 cases proceed on a no-asset basis where none of the debtor's property is sold.

If claims are filed in a chapter 7 case, the debtor is only in the position to object to the claims if he or she is affected by the outcome. General unsecured claims in chapter 7 are paid their proportional share and then discharged. If a trustee has $1000 to pay to credit card companies, the debtor has little or no concern whether two companies get $500 or three get $333, as the debtor ends up owing nothing in the end. On the other hand, if the trustee will be paying non-dischargable claims that survive the bankruptcy, the debtor would have standing to object to other claims that would increase the payments to the non-dischargable creditors. In the rare case where trustee has enough funds that the debtor would be due a refund, the debtor would have standing to object to any claim, as the allowability of all claims impacts the amount of the refund.

In short, the rule is that the debtor may object to a chapter 7 claim if a successful objection would lead to an improved position for the debtor at that point or after the bankruptcy closes.

Chapter 13 Claims

Chapter 13 bankruptcy doesn't present the standing issue that chapter 7 does. The debtor in chapter 13 is funding the plan through payments from his or her earnings, and there is always an element of uncertainty about the future of the plan. Creditors in every chapter 13 are notified to file claims.

Even if the debtor's plan proposes a 0% dividend to unsecured creditors, a debtor may wish to object to claims that are poorly documented or of questionable merit. In the event that the plan is modified to pay an amount to unsecured creditors, having objected to claims previously will often put the debtor in a better position.