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In re Jackson

United States Bankruptcy Court, E.D. Virginia
May 11, 1999
Case No. 98-14484-SSM (Bankr. E.D. Va. May. 11, 1999)

Opinion

Case No. 98-14484-SSM

May 11, 1999

Patricia A. Weth, Esquire, Springfield, VA, of Counsel for the Virginia Department of Taxation

Ronald B. Cox, Esquire, Woodbridge, VA, of Counsel for the debtor


MEMORANDUM OPINION


This matter is before the court on a motion by the Commonwealth of Virginia Department of Taxation to allow a late-filed claim. A hearing was held in open court on April 13, 1999. The Commonwealth and the debtor were present by counsel. The chapter 13 trustee was present in person. After hearing argument from the parties, the court took the matter under advisement in order to review the record and the applicable law. For the reasons stated, the court determines that the motion to file a late claim must be denied.

At the hearing, the court allowed the Commonwealth to submit supplemental authorities in support of its position within 5 days of the hearing. The Commonwealth filed a supplemental memorandum on April 20, 1999, in which it requested a ruling that, if the filing of a late claim were not allowed, the debtor's liability for the tax debt would not be discharged. Because the Commonwealth's memorandum raised a new issue, the court gave the debtor (and, if he were so inclined, the chapter 13 trustee) 15 days to file a reply brief. The debtor filed a reply brief on May 7, 1999, and the issues are now ripe for decision.

Background

Ryan Cain Jackson ("the debtor") filed a voluntary petition in this court on June 11, 1998, for the adjustment of his debts under chapter 13 of the Bankruptcy Code. This was his third bankruptcy filing in this court. On February 22, 1996, he had filed a joint chapter 7 petition, Docket No. 96-10820, with his former wife, Katrina Anne Jackson. He and Ms. Jackson received a discharge on June 9, 1996. The debtor then filed a chapter 13 petition, Docket No. 96-13398, on June 27, 1996. Although a plan was confirmed, the case was ultimately dismissed at the debtor's own request on June 8, 1998. The present case, as noted above, was filed three days later.

The Commonwealth stated in its original memorandum that it had not "received" notice that Case No. 96-13398 had been dismissed. However, no evidence was presented in support of that assertion, and the docket entries for that case reflect that the clerk mailed notice of the dismissal of the case to all creditors on June 10, 1998.

On his schedules, the debtor listed the Commonwealth of Virginia Department of Taxation as a creditor holding priority claims in the aggregate amount of $9,681. The mailing certificate reflects that the notice of commencement of case was mailed to the Department. Among other information set forth in the notice was the December 8, 1998, bar date for the filing of claims by governmental units.

The debtor filed a total of three plans. The first two were denied confirmation based on objections filed by the Internal Revenue Service. The third plan was dated January 25, 1999. It provided for a series of "stepped" payments to the chapter 13 trustee in the average amount of $1,214.58 per month for 60 months, and an estimated dividend to unsecured creditors of 20 cents on the dollar. The largest single creditor to be paid under the plan was the Internal Revenue Service, which had an allowed $45,581 priority claim (which was to be paid in full) and a $9,186 general unsecured claim. The other major creditor was the holder of a lien against the debtor's automobile. Although the Virginia Department of Taxation was listed in the section of the plan which treated priority claims, no amount was provided to be paid; rather, the plan simply stated, "(no claim filed by Bar date of 12/8/98)".

The debtor's second proposed plan, dated December 23, 1998, had contained the same notation.

The third plan was confirmed without objection on March 17, 1999. In the interim, the Virginia Department of Taxation filed on March 12, 1999, the motion that is presently before the court seeking allowance of a late-filed priority claim in the amount of $10,971.25 for unpaid state income taxes for 1992, 1994, 1995, and 1996. The motion represents that the Department was unaware that the prior chapter 13 case had been dismissed and was thus unaware that its previously-filed claims were no longer effective.

In its motion, the Department represents that while the prior case was still pending it filed an original and amended proof of claim for prepetition taxes and an administrative claim for post-petition taxes. Additionally, the Department represents that in August 1998 — two months after the prior case was dismissed and the new case commenced — it filed in the prior case an amended administrative claim for post-petition taxes. For the purpose of the present motion, the court accepts these representations as true, although the court is unable to verify them because the file in the prior case has been transferred to the Federal Records Center.

Discussion A.

Except in chapter 11 cases, where certain scheduled claims are deemed filed, a creditor desiring to receive distributions in a bankruptcy case is required to file a proof of claim. § 502(b)(9), Bankruptcy Code; F.R.Bankr.P. 3002(a). The deadline for filing claims in a chapter 13 case is 90 days after the first date set for the meeting of creditors, except for a "governmental unit," which has until 180 days after the filing of the petition. F.R.Bankr.P. 3002(c)(1); § 502(b)(9), Bankruptcy Code. In the present case, the petition was filed on June 11, 1998, and the claims bar date for governmental units was therefore December 8, 1998. While the court is empowered to extend the time for the United States, a state, or a subdivision thereof to file a proof of claim, the motion for extension must be filed " before the expiration of such period." F.R.Bankr.P. 3002(c)(1) (emphasis added). The court is not permitted to extend that time, except as specifically provided in Rule 3002(c). F.R.Bankr.P. 9006(b)(3). Chapter 13, unlike chapter 7 and chapter 11, contains no general provision for payment or allowance of late-filed claims. The only creditors entitled under Rule 3002(c) to an extension after the bar date has run are "an infant or incompetent person or the representative of either," a creditor whose claim arises from having to disgorge a preference, and a creditor whose claim arises from the rejection of an executory contract. F.R.Bankr.P. 3002(c)(2), (c)(3), and (c)(4).

In chapter 7, a late-filed claim may be paid where the creditor did not have notice or actual knowledge of the case in time to file a timely proof of claim. § 726(a)(2)(c). Additionally, even where the creditor had such notice, a late-filed claim may be paid to the extent funds remain after all timely-filed claims have been paid in full. § 726(a)(3). In chapter 11, a late-filed claim may be allowed where the failure to file was the result of excusable neglect. F.R.Bankr.P. 3003(c)(3) and 9006(b)(1); Pioneer Investment Services Co. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993); In re Quartercall Communications, Inc., 1996 WL 910910 (Bankr. E.D. Va. 1996) (applying Pioneer).

It is unquestionably true that disallowance of an otherwise valid claim is both harsh to the creditor and a windfall to the debtor where, as here, the debtor has acknowledged the claim on its schedules and there has been an understandable mistake by the creditor in believing that its claim had been properly filed. At the same time, Rule 9006(b) is very clear that the claims bar date in a chapter 13 case cannot be extended after the fact based on excusable neglect. Not only does such a rule promote expedition and certainty in the administration of chapter 13 cases, it also promotes fairness to those creditors who, unlike the Commonwealth, filed timely proofs of claim. Since none of the specific exceptions in Rule 3002(c) applies, the court simply has no authority to grant the requested relief. Matter of Greenig, 152 F.3d 631, 634-35 (7th Cir. 1998) (acknowledging harshness of result, but holding that failure to file claim within time period specified by rules is "absolute bar" unless one of the specific exceptions in Rule 3302(c) applies; bankruptcy court "cannot use its equitable power to circumvent the law").

In Pioneer, the Supreme Court explained that the determination of whether neglect is excusable is an equitable one, taking into account all relevant circumstances. 507 U.S. at 395, 113 S.Ct. at 1498. These include the danger of prejudice to the debtor, the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith. Id. Because the debtor's plan has been confirmed, and because allowance of the Commonwealth's claim (which as a priority claim would have to be paid in full) at this point would substantially reduce — perhaps to zero — the dividend to unsecured creditors, it is at least questionable whether the Commonwealth's neglect could satisfy the no-prejudice component of the excusable neglect standard even if that standard applied.

Like almost all chapter 13 plans in this district, the plan that was confirmed in this case was a "pot plan" rather than a "percentage plan." In a percentage plan, creditors receive a set percentage of their allowed claims while leaving exact amount the debtor will pay in flux until all claims are resolved. In a pot plan, the debtor pays a fixed amount, and the percentage the creditors receive depends on the total amount of allowed claims. In re Witkowski, 16 F.3d 739, 741 n. 11 (7th Cir. 1994). Thus, allowance of late-filed claims necessarily reduces the percentage dividend paid on timely-filed unsecured claims.

B.

It is true that bankruptcy courts have exercised their equitable powers, where a creditor has actively participated in the case, to treat other documents filed in the case prior to the bar date as an "informal" proof of claim that could be amended, after the bar date had passed, by filing a formal proof of claim. Dabney v. Addison, 65 B.R. 348 (E.D. Va. 1985). Such an amended claim may be allowed if there is evidence of "sufficient notice of the claim [being] given in the course of the bankruptcy proceeding." Davis v. Columbia Constr. Co. (In re Davis), 936 F.2d 771, 775 (4th Cir. 1991) (quoting Fyne v. Atlas Supply Co., 245 F.2d 107 (4th Cir. 1957)). The Davis court reasoned that an amended claim may be allowed, even in the absence of a prior written "informal" claim, if the creditor has "undertake[n] some affirmative action to constitute sufficient notice that [the creditor] has a claim against the estate." Id. at 776. Dabney sets forth a list of representative, but not exhaustive, activities of the creditor that would be considered sufficient notice of the creditor's claim against the estate. These include: sending bills to a trustee demanding to be paid, filing an objection to a trustee's motion to sell property containing evidence of the creditor's security interest in the property to be sold, attending and being an active party at the meeting of creditors, and an exchange of letters between the trustee and the creditor seeking payment from the estate. Dabney, 65 B.R. at 351. However, the court cautioned that notice of the creditor's claim would not be found merely by proving knowledge on the part of the trustee of the asserted claim or a mere listing of the claim by the debtor in the debtor's schedules. Id. Rather, the essence of being able to find an "informal" proof of claim is that there must be some evidence that the creditor has made a demand on the debtor and which "manifests the creditor's intention to hold the debtor liable." In re A.H. Robins Company, Inc., 118 B.R. 436, 439 (Bankr. E.D. Va. 1990) (Shelley, J.) ( quoting In re Middle Plantation of Williams burg, Inc., 48 B.R. 789, 795 (E. D. Va. 1985)).

In the present case, the Commonwealth of Virginia filed no pleadings (such as an objection to confirmation) and took no other action in this case prior to the bar date that might be construed as asserting a claim against the bankruptcy estate. The only action taken by the Department to assert a claim during the pendency of the present case was the filing, on or about August 12, 1998, of an amended administrative claim for post-petition taxes in the amount of $1,953.66 in the debtor's prior case (which by that time had been dismissed and closed). Such action is simply not sufficient to put the debtor and the chapter 13 trustee on notice that the Commonwealth was asserting a $10,971.25 claim in the present case. See In re Honda, 106 B.R. 204 (Bankr. D. Hawaii 1989) (lift stay motion filed in corporate debtor's case could not be considered informal proof of claim in guarantor's individual case). See also Mann v. CCR Financial Planning, Ltd (In re McKoy), 211 B.R. 843 (E.D. Va. 1997) (dischargeability complaint erroneously filed in case of debtor's wholly-owned corporation could not be amended, after dischargeability bar date had passed, to show that it was filed in the individual debtor's case); H. T. Paul Co. v. Atteberry (In re Atteberry), 194 B.R. 521 (D. Kan. 1996) (motion for extension of time filed in debtor's chapter 11 case did not extend dischargeability deadline in same debtor's separate chapter 7 case); but see Press v. Forest Laboratories, Inc., 45 F.R.D. 354 (S.D. N.Y. 1968) (where defendant filed answer in earlier action, which was dismissed and refiled after court refused leave to amend complaint, answer in earlier action was a sufficient "appearance" for the purpose of Rule 55 that notice should have been given of the plaintiff's motion for default judgment).

Rule 5005(c) permits a bankruptcy court, "[i]n the interest of justice," to treat an original paper erroneously filed with the United States Trustee, the trustee, the attorney for the debtor, or the clerk of the district court as having been filed with the clerk of the bankruptcy court. Thus, a creditor who presents a timely proof of claim, but presents it to the wrong person, may have the claim allowed, even though it is not physically received by the clerk of the bankruptcy court until after the bar date has passed. 9 Collier on Bankruptcy ¶ 3002.03[l], p. 3002-12 (Lawrence B. King, ed., 15th ed. rev. 1998). Nothing in the bankruptcy rules, however, addresses filing in the wrong case.

The only case the court's own research has discovered where a claim filed in an entirely separate proceeding was allowed as an informal claim in the debtor's case is In re Meyer Son Seafood Corp., 188 B.R. 315 (Bankr. S.D. Fla. 1995). There, the debtor had filed in state court a voluntary assignment for the benefit of creditors. Shortly thereafter, an involuntary chapter 7 bankruptcy petition was filed against the debtor in federal bankruptcy court, and a chapter 7 trustee was appointed. The creditor filed its proof of claim with the state court, but not in the bankruptcy court. The bankruptcy case was converted to chapter 11, then back to chapter 7. Prior to the bar date for claims in the bankruptcy case, the assignee in the state court assignment proceeding turned over to the chapter 7 trustee copies of all the claims filed with the state court. Because of an inaccurate mailing matrix, the creditor never received formal notice of the commencement or conversion of the bankruptcy case. Under those facts, the bankruptcy court held that the delivery of the state court claim to the chapter 7 trustee — prior to the claim bar date in the bankruptcy case — qualified as an "informal" proof of claim, and the court allowed the claim. Here, by contrast, nothing was delivered to the chapter 13 trustee prior to the claim bar date that would have put him on notice that the Commonwealth was asserting a claim in the debtor's present case.

C.

The Commonwealth contends, relying on ln re Anderson, 159 B.R. 830 (Bankr. N.D. Ill. 1993), that the court should allow its untimely claim because it did not receive notice of the dismissal of the prior case. As noted above, however, there is no evidentiary support for the asserted lack of notice. Anderson, in any event, presents very different facts. There, the Illinois Department of Revenue was listed as a creditor in the schedules only for individual state income taxes. Neither the caption of the case nor the schedules and statement of financial affairs disclosed the debtor's involvement with a liquor store operating under the name of Lucky Liquors, even though there were two pending lawsuits in state court against the debtor for tax liabilities in connection with the operation of that business. Only after the claims bar date did the debtor advise the Department of the connection between those taxes and his own bankruptcy. The Department then sought to file proofs of claim for the tax liabilities related to the liquor store. Ruling in favor of the taxing authority, the court found that it could use its equitable powers to allow the late filing of a proof of claim when a creditor had not received proper notice of the bankruptcy filing. Id. at 835. In the present case, by contrast, the debtor duly listed the Virginia tax claims on his schedules, and the record reflects that the Commonwealth was mailed notice of the commencement of the present case. That the Commonwealth did not, through clerical error, recognize the significance of the notice hardly constitutes lack of notice or exceptional circumstances.

This is by no means a universal view. There is a basic split of authority as to the status of an omitted creditor in a chapter 13 case. See In re Kristiniak, 208 B.R. 132, 134 (Bankr. E.D. Pa. 1997) (collecting cases). One line essentially holds that the claims of unlisted creditors are not "provided for" in the plan and are therefore not discharged. Such creditors are not entitled to share in the distribution from the estate, but may enforce their claims after the conclusion of the case or, if they obtain relief from the automatic stay, even while the case is pending. The other line of cases holds that the proper solution is the extension of the bar date for the omitted creditor. Since the present case does not involve an unlisted or omitted creditor, the court need not resolve the conflict.

The Commonwealth also relies on In re Gardenhire, 220 B.R. 376 (9th Cir. BAP 1998) for the proposition that the bankruptcy court has "broad" equitable powers to allow untimely claims. Id. at 383. Specifically, Gardenhire reasoned that § 502(b)(9), Bankruptcy Code, is analogous to a statute of limitations and accordingly held that the doctrine of equitable tolling may permit the late filing of a claim in "exceptional cases." In Gardenhire, the debtor's chapter 13 case had been dismissed on the 83rd day as a result of a clerical error by the chapter 13 trustee. Notice of the dismissal was sent to all creditors two days later. When the IRS received the notice of dismissal, it ceased preparing a proof of claim. The order of dismissal was subsequently vacated, and on the 165th day, notice of the reinstatement of the case was mailed to creditors. Upon receiving the notice, the IRS resumed preparation of its proof of claim, which it ultimately filed on the 191st day. The issue was whether, under the rubric of "equitable tolling," the bar date could be extended where the tax authority had relied on the earlier notice of dismissal. Based on the circumstances of that case, the court held that it not only could but should be applied.

In that case, there was only one creditor other than the IRS, and its claim was less than 5% of the IRS's claim. If the IRS's claim were disallowed, the plan would be completed in only two months.

While the specific facts in Gardenhire are not at all similar, the Commonwealth relies on language in the opinion to the effect that bankruptcy courts "have broad equitable power to act in a manner not inconsistent with the Bankruptcy Code," Id. at 383, and it argues that the bar date should be extended based on theories either of equitable estoppel or unjust enrichment. The Commonwealth points to the fact that the debtor knew of the tax liability and included the Commonwealth's claim in the schedules. Assuming, without deciding, that this court indeed has "broad" powers to allow a late claim, notwithstanding the restrictive language of Rules 3002(c)(1) and 9006(b)(3), equity does not save the day for the Commonwealth. First, "[e]quitable estoppel requires reasonable reliance on a defendant's words or conduct in forbearing suit within the applicable limitations period[.]" Schunk v. Santos (In re Santos), 112 B.R. 1001, 1007 (9th Cir. BAP 1990). The Commonwealth fails to allege any words or conduct on the part of the debtor that misled the Department into not filing a timely claim. Nor can the court find that generalized notions of "unjust enrichment" constitute a basis for ignoring the plain language of the bankruptcy rules. The debtor's knowledge of the Commonwealth's claim, without more, does not amount to wrongful conduct, where the claim was properly listed on the schedules and the Commonwealth was given notice of the commencement of the case. Where the creditor is negligent, it must suffer the consequences of not filing a timely proof of claim even if disallowance confers an unearned benefit on the debtor.

D.

The Commonwealth, in a post-hearing memorandum, has alternatively urged this court, if a late proof of claim is not permitted to be filed, to not allow the claim to be discharged. In effect, the Commonwealth is asking the court to carve out an equitable exception to § 1328(a)(2), Bankruptcy Code, which grants the debtor, after completion of all plan payments, "a discharge of all debts provided for by the plan or disallowed under section 502 of this title." However, the language of the statute could not be plainer and admits of no wiggle-room. A claim that is disallowed is discharged (provided, of course, the debtor completes the payments required by the plan), and this court simply has no power to direct otherwise.

A determination of dischargeability normally requires an adversary proceeding. Fed.RBankr.P. 7001. However, this court has previously held that the more formal procedure of an adversary proceeding is intended to protect the defendant, and that where no harm will result to the administration of justice, the defendant can waive those protections. In re Wilkinson, 196 B.R. 311, 315 (Bankr. E.D. Va. 1996). Particularly where a pure question of law is presented, requiring the parties to commence a separate adversary proceeding to resolve the dischargeability issue is a poor use of judicial resources. In this connection, the court notes that the Fourth Circuit, in two reported cases, has permitted a determination of dischargeability to be made in the context of a motion to reopen the debtors's case rather than an adversary proceeding. See Thompson v. Commonwealth of Va. (In re Thompson), 16 F.3d 576 (4th Cir. 1994) (affirming bankruptcy court denial of chapter 7 debtor's motion to reopen case to add unpaid court costs from state court criminal conviction, since debt was nondischargeable as a matter of law); Commonwealth of Va v. Collins (In re Collins), — F.3d —, 1999 WL 183800 (4th Cir. 1999) (affirming bankruptcy court decision reopening case and determining that state's claim against bail bondsman had been discharged). Indeed, by determining the issue of dischargeability at the present time as the Commonwealth has requested, the court will avoid possible 11th Amendment issues down the road. See Collins at *2-6 (11th Amendment not implicated where state is not made a defendant in an adversary proceeding).

Two types of discharge are available in chapter 13. The ordinary chapter 13 discharge — sometimes called a "super discharge" because it is significantly broader than a chapter 7 discharge — is granted to debtors who complete their plan payments. § 1328(a), Bankruptcy Code. The other — commonly referred to as a "hardship discharge" — may be granted to a debtor who has not completed payments under the plan if the failure to complete payments "is due to circumstances for which the debtor should not justly be held accountable" if certain other requirements are met. § 1328(b), Bankruptcy Code. A hardship discharge, however, is subject to the same exceptions as a chapter 7 discharge. Thus, taxes that would not be dischargeable in a chapter 7 case are not discharged by a chapter 13 hardship discharge.

Because § 1328(a) is phrased in the disjunctive, it is not strictly necessary to reach the question of whether the Commonwealth's claim is "provided for" in the plan. However, since the Commonwealth has specifically raised the argument, it is appropriate to address it. Simply put, the assertion by the Commonwealth that its claim has not been "provided for" is untenable. Certainly, had the Commonwealth not been listed as a creditor or had not been given notice of the case in time to file a proof of claim, its claim would not have been "provided for" within the meaning of § 1328(a) and would not be discharged. See, e.g., In re Hairopoulos, 193 B.R. 889, 892 (E.D. Mo. 1996); In re Doane 19 B.R. 1007, 1009 (W.D. Va. 1982); In re Kristiniak, 208 B.R. 132, 134 (Bankr. W.D. Pa. 1997); In re Crites, 201 B.R. 277, 281-82 (Bankr. D. Or. 1996); In re Curenton 205 B.R. 967, 970-71 (Bankr. M.D. Ala. 1995); In re Greenburgh, 151 B.R. 709, 713 (Bankr. E.D. Pa. 1993); In re Scott, 119 B.R. 818, 819 (Bankr. M. D. Ala. 1990); In re Pack 105 B.R. 703, 706 (Bankr. M.D. Fla. 1989); In re Vlavianos, 71 B.R. 789, 793 (Bankr. W.D Va. 1985). However, a claim that is addressed in a confirmed plan and is not paid solely because it is not an allowed claim has nevertheless been "provided for." As explained by a leading commentator,

The Code does not specifically define "provided for," and some creditors have argued that if a plan does not propose to make payments on a debt it does not provide for that debt. The Court of Appeals for the Ninth Circuit properly rejected this argument in Lawrence Tractor Co. v. Gregory (In re Gregory) [ 705 F.2d 1118 (9th Cir. 1983)], which held that to "provide for" a claim a plan need only "make provision for it, i.e., deal with it or refer to it." This broad definition of the term "provided for" was subsequently adopted by the Supreme Court in Rake v. Wade [ 508 U.S. 464, 473, 113 S.Ct. 2187, 2193, 124 L.Ed.2d 424 (1993)]. . . . [T]he fact that a creditor is not paid because it failed to file a claim when given the opportunity to do so has no relevance to the dischargeability of the debt.

8 Collier on Bankruptcy, ¶ 1328.02[3][a], p. 1328-10-11 (Lawrence P. King, ed.; 15th ed. rev. 1998). See also Cen-Pen Corp. v. Hanson, 58 F.3d 89, 94 (4th Cir. 1995) ("As a general matter, a plan 'provides for' a claim or interest when it acknowledges the claim or interest and makes explicit provision for its treatment."); In re Vlavianos, 71 B.R. 789, 792 (Bankr. W.D. Va. 1986) ("For a plan to 'provide for' a claim within the meaning of § 1328(a), the plan must 'make a provision for' the claim; that is, 'deal with it or refer to it.'").

The two cases cited by the Commonwealth are not to the contrary. In In re Gray, 174 B.R. 228 (Bankr. E.D. Ky. 1994), the debtor did not list the IRS as a creditor, and the IRS did not learn of the pendency of the chapter 13 case until after the bar date for claims had passed and the plan had been confirmed. By contrast, the debtor in the present case duly listed the Commonwealth as the holder of tax claims, and the Commonwealth was given notice of the commencement of the case in time to file a proof of claim. In Dixon v. IRS (In re Dixon), 218 B.R. 150 (10th Cir. BAP 1998), the debtors listed the IRS as a creditor for unpaid 1992 taxes and proposed a plan that would have paid those taxes as a priority claim. However, the IRS did not file a timely proof of claim. After the debtors received their discharge, the IRS attempted to collect the taxes in question by a wage levy and by setoff against post-petition tax refunds. The court, in holding that the tax claim was discharged, reasoned,

The Debtors' plan provided for the IRS's claim to be paid, and it was not paid only because no proof of claim was filed. Except when a lack of notice to the creditor is involved . . . such a claim is nevertheless "provided for" by the plan within the meaning of § 1328(a) and is therefore discharged.

Id. at 153 (emphasis added). As in Dixon, the only reason the Commonwealth's claim is not being paid in the present case is because no timely proof of claim was filed. It is true that the confirmed plan in the present case, unlike the confirmed plan in Dixon, does not propose payment of the claim. But the reason no payment is proposed is because the bar date has passed. Even if the plan (as in Dixon) had stated in so many words that the allowed priority claim of the Commonwealth would be paid in full, no payment could actually have been made by the chapter 13 trustee in the absence of a timely filed claim. Indeed, the original plan filed in this case did propose payment of the Department's claim. That plan was not confirmed because of objections by other creditors, and by the time the modified plan was filed, the bar date for claims had passed. The modified plan properly noted the existence of the Department's claim but, consistent with the Bankruptcy Code and Rules, also properly recognized that no payment could be made on account of it. Although the Commonwealth may not like the treatment of its claim, such treatment is nevertheless consistent with the Bankruptcy Code and Rules. Accordingly, the court concludes that the confirmed plan "provides for" the Commonwealth's claim, and that upon completion of plan payments and the entry of a discharge under § 1328(a), the debtor's personal liability for the taxes in question will be discharged.

E.

Notwithstanding the understandable confusion caused by the debtor's dismissal and immediate refiling of his chapter 13 case, the failure by the Virginia Department of Taxation to file a timely proof of claim in the present case is an absolute bar to allowance of the claim where the request for extension of time was not made until after the bar date has already passed and where there have been no papers filed or other action taken in the case that can be construed as an amendable "informal" proof of claim. Since the claim has been provided for in the plan and has also been disallowed under § 502, Bankruptcy Code — either of which would be sufficient to effect its discharge upon completion of plan payments — there is no legal basis for a determination that the claim will not be discharged. Accordingly, a separate order will be entered denying the motion to allow the late-filed claim and determining that the disallowed claim will be discharged upon completion of plan payments and the granting of a discharge under § 1328(a).


Summaries of

In re Jackson

United States Bankruptcy Court, E.D. Virginia
May 11, 1999
Case No. 98-14484-SSM (Bankr. E.D. Va. May. 11, 1999)
Case details for

In re Jackson

Case Details

Full title:In re: RYAN CAIN JACKSON, Chapter 13, Debtor

Court:United States Bankruptcy Court, E.D. Virginia

Date published: May 11, 1999

Citations

Case No. 98-14484-SSM (Bankr. E.D. Va. May. 11, 1999)