IN RE: MARGARET WILLIAMS CASE NO. 91-51078

UNITED STATES BANKRUPTCY COURT 

EASTERN DISTRICT OF KENTUCKY

LEXINGTON

IN RE:

MARGARET WILLIAMS CASE NO. 91-51078

DEBTOR

MEMORANDUM OPINION

This case was heard by the court on June 17, 1996, on the objection of the chapter 13 trustee to allowance of the claim of United Bank and Trust Company and on the motion of the trustee for an order requiring the bank to return to the trustee the amount of $2,038.68 paid by the trustee on the claim.

The debtor filed a petition for relief under chapter 13 of the Bankruptcy Code on May 29, 1991. United Bank, 100 United Drive, Versailles, Kentucky 40383 is listed as a creditor holding an unsecured claim in the amount of $2,819.00, AC# 17300.

The record indicates the bank was notified by notice dated and mailed on June 11, 1991, of the meeting of creditors held on July 1, 1991. The notice to the bank was not returned. There is a presumption the bank received the notice of the debtor's chapter 13 bankruptcy case, of the date of the meeting of creditors, and of the date of the hearing on confirmation of the debtor's plan. The notice, which included a form for filing a claim, advised creditors that claims would not be allowed unless filed within 90 days of the date fixed for the meeting of creditors. The time for filing unsecured claims expired on or about October 1, 1991.

The debtor's chapter 13 plan, a so-called pool plan, was confirmed by the court on August 9, 1991. The plan provided the debtor was to pay to the chapter 13 trustee $420 per month for 60 months, or a total of $25,200, from which, after payment of administrative expenses and allowed secured claims, the claims of unsecured creditors were to be paid to the extent of the highest percentage possible, estimated to be .83 cents on the dollar.

United Bank and Trust Company did not timely file its claim. The bank's claim was filed on April 30, 1993, as an unsecured claim in the amount of $2,611.69. Counsel for the bank avers the bank did not learn of the debtor's chapter 13 case until the bank commenced a collection action against the debtor and was advised of the bankruptcy by pleading filed therein by counsel for the debtor on April 20, 1993, after which time the bank filed its proof of claim. However, the record indicates the bank was given notice of the debtor's chapter 13 case in ample time to file a proof of claim.

For reasons that are not clear the chapter 13 trustee did not expeditiously object to allowance of the bank's claim. Instead the claim was treated as allowed as filed and the trustee made regular disbursements in the total amount of $2,038.68 in payment of the claim.

Apparently, the chapter 13 trustee discovered his error in payment of the bank's claim in an audit near the conclusion of the debtor's chapter 13 plan. The plan will have been in process five years, the maximum period permitted, on August 9, 1996.

The chapter 13 trustee advises that the monies erroneously disbursed in payment of the bank's claim, once recovered, will be disbursed pro rata in payment of the claims of creditors whose claims were timely filed.

The court is of the opinion the relief requested by the chapter 13 trustee should be granted. The court has no discretion to extend the time for filing claims under the facts presented by this case. Rule 3002(c), Federal Rules of Bankruptcy Procedure. A creditor holding an unsecured claim must file the claim within the time permitted by Rule 3002 in order for the claim to be allowed.

Title 11 U.S.C. 502(j) recognizes the right of a trustee to recover from a creditor any excess payment or transfer made to such creditor, such as has occurred in this case. The court does not believe an adversary proceeding is mandated by Rules 3007 and 7001(1) of the Federal Rules of Bankruptcy Procedure to recover monies erroneously disbursed to a creditor by the trustee in a bankruptcy case.

An order shall be entered sustaining the objection of the trustee to allowance of the claim of United Bank and Trust Company and ordering the bank to refund the sum of $2,038.68 erroneously paid on the bank's claim by the chapter 13 trustee.

Dated:

By the court -

 

______________________________

JOE LEE, CHIEF JUDGE

 

Copies to:

 

Sidney N. White, Esq.

Lori S. Conley, Esq.

Barbara M. Griffin, Esq.

 

 

f:\opinions\1996\williams

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

LEXINGTON

 

 

IN RE:

 

MARGARET WILLIAMS CASE NO. 91-51078

 

DEBTOR

 

 

ORDER

 

 

In conformity with the memorandum opinion of the court this day entered, IT IS ORDERED that the objection of the trustee to the claim of United Bank and Trust Company for $2,611.69 on the ground the claim was filed later than 90 days after the first date assigned for the meeting of creditors is hereby sustained.

IT IS FURTHER ORDERED that United Bank and Trust Company refund to the chapter 13 trustee the amount of $2,038.68.

Dated:

By the court -

 

_____________________________

JOE LEE, CHIEF JUDGE

 

Copies to:

 

Sidney N. White, Esq.

Lori S. Conley, Esq.

Barbara M. Griffin, Esq.