785 F.3d 1161 (7th Cir. 2015), 14-2052, In re Pajian

Docket Nº:14-2052
Citation:785 F.3d 1161
Opinion Judge:Wood, Chief Judge.
Party Name:IN RE: EDWARD J. PAJIAN, Debtor-Appellant
Attorney:For In the Matter of: EDWARD J. PAJIAN, Debtor - Appellant: Robert V. Schaller, Attorney, SCHALLER LAW FIRM, Oak Brook, IL. For LISLE SAVINGS BANK, Appellee: Mark F. Kalina, Attorney, GUERARD, KALINA & BUTKUS, Wheaton, IL. For GLENN B. STEARNS, Trustee: Glenn B. Stearns, Lisle, IL.
Judge Panel:Before WOOD, Chief Judge, and EASTERBROOK and WILLIAMS, Circuit Judges.
Case Date:May 11, 2015
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
SUMMARY

After Pajian filed for bankruptcy, Lisle Savings Bank, a creditor, filed a proof of claim ($330,472.19) in the bankruptcy court, but missed the bankruptcy court’s filing deadline (set under FED. R. BANKR. P. 3002(c)) by several months. The Bank argued that Rule 3002(c) applies only to unsecured creditors; as a secured creditor, it asserted, it was entitled to file a proof of claim at any time... (see full summary)

 
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785 F.3d 1161 (7th Cir. 2015)

IN RE: EDWARD J. PAJIAN, Debtor-Appellant

No. 14-2052

United States Court of Appeals, Seventh Circuit

May 11, 2015

Argued October 27, 2014.

Appeal from the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. No. 13 B 25893 -- Donald R. Cassling, Bankruptcy Judge.

For In the Matter of: EDWARD J. PAJIAN, Debtor - Appellant: Robert V. Schaller, Attorney, SCHALLER LAW FIRM, Oak Brook, IL.

For LISLE SAVINGS BANK, Appellee: Mark F. Kalina, Attorney, GUERARD, KALINA & BUTKUS, Wheaton, IL.

For GLENN B. STEARNS, Trustee: Glenn B. Stearns, Lisle, IL.

Before WOOD, Chief Judge, and EASTERBROOK and WILLIAMS, Circuit Judges.

OPINION

Wood, Chief Judge.

After Edward Pajian filed for bankruptcy, Lisle Savings Bank, one of Pajian's creditors, filed a proof of claim in the bankruptcy court. This is standard procedure, but there was a hiccup: the Bank missed the bankruptcy court's deadline for filing such proofs by several months. The court had set the deadline in accordance with Federal Rule of Bankruptcy Procedure 3002(c),

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which requires creditors to file proofs of claim within 90 days of the date set for the meeting of the debtor's creditors. The Bank excused its tardiness with the argument that Rule 3002(c) applies only to unsecured creditors; as a secured creditor, it asserted, it was entitled to file a proof of claim at any time, at least until plan confirmation. The bankruptcy court agreed with the Bank and overruled Pajian's objection to the Bank's claim. We now reverse that decision and hold that a secured creditor must file its proof of claim by the 90-day deadline specified by Rule 3002(c).

I

Edward Pajian filed a voluntary Chapter 13 bankruptcy petition on June 25, 2013. The bankruptcy court clerk mailed a " Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors, & Deadlines" to Pajian's creditors, including Lisle Savings Bank. The notice instructed non-governmental creditors to file all proofs of claim by October 15, 2013, 90 days after the date set for the meeting of Pajian's creditors. See Fed. R. Bankr. P. 3002(c). Missing the deadline by more than three months, the Bank filed a proof of claim for $330,472.19 on January 21, 2014. Its claim covered two debts. One was a secured debt for the first mortgage on a commercial property located in Lisle, Illinois; Pajian owned a one-half interest in the property. The second was an unsecured debt for a deficiency judgment resulting from a state foreclosure proceeding on a residential property in Naperville, Illinois.

The bankruptcy court docketed the Bank's claim as Claim No. 5. Pajian filed an objection to the claim, arguing that it was barred from inclusion in his Chapter 13 plan because the Bank had missed the deadline imposed by Rule 3002(c). The Bank countered with three arguments: 1) that a secured creditor does not need to file a proof of claim in order to secure distributions under a Chapter 13 plan, 2) that a pleading it had submitted to the court before the deadline amounted to an " informal" proof of claim, and 3) that the Rule 3002(c) deadline is inapplicable to secured claims. The bankruptcy court rejected the first and second arguments but...

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