when you're ready thank you your honor may please of course my name is quentin rose on here on behalf of spokane law enforcement credit union excuse me what we're asking the court in this case to consider is extending  the informal proof of claim rules that apply to bankruptcy rule three thousand and two two bankruptcy rule three thousand and four under bankruptcy rule three thousand two creditor is required by the claims bar day to submit a proof of claim if he or she wants to participate in the distribution under a chapter thirteen plan and there's a set of forms that they're required to use by the claims party but in the case that goes back to you did it informally in a way that suffices or we've got to find that the material provided by the other side suffices yes sure in this particular case the credit union was not represented by counsel did not submit a proof of claim but in the debtor's schedules  statements of affairs she candidly said that i owe this i'm out and i don't dispute it so it was a liquidated undisputed disclosure that she made under oath on the first day of the bankruptcy let me ask you question i fact no proof of claim was ever needed why did you file one well you know if we wanted to participate in the distribution well you know if you didn't need to provide claim you would have provided you would have been able argument first of all said we were late we know we were late we had a bad employee they didn't do it right we know we were late but please forgive us and let us get lettuce and anyway and now you've turned it on your head you said forget that forget that we filed late forget that we said we filed late now turn on your head everything else says do it chapter thirteen and give it to us in the way that's what it seems to me you're arguing  well the way i look at it your honor is that i know the way you look at it i just want to know what how you really why we can really get there i mean chapter eleven there's no question that in a chapter eleven case the schedules are enough it's under eleven u s eleven one one a now we're in thirty if congress thought that the schedules were enough why when they put it in thirteen if they didn't put it are i think the same question is pertinent with regard to the informal played proof of just a minute answer my question why wouldn't they have put it in thirteen if they did if they thought it was the same as eleven which is what you arguing well is they just forget that they couldn't overlook the charm was that what you're arguing but what we're arguing was the problem is when you go to an informal proof of claim and you're looking at something that you should get because you've got an informal schedule you had to file something and you never did you want me to look at what the dead are filed and make it your informal proof of playing to submit a proof of claim on behalf of the creditor so you're going to go to did the debtor file a proof a claim for you is that your argument the argument is that by listing the debt as undisputed and liquidated that functions it serves the same substantive function as a rule three thousand and four when the debtor submit a proof of claim on behalf of the creditor if we're looking at whether the debtor filed approved claim for you there is nothing in what happened here which meets the schedule for the debtor to file the informal proof the claim well good for looking at whether you have an informal proof of claim anyway you didn't file it and then there's nothing in the debtor schedule which would suggest it was evidence of your intent to hold the debtor liable there's nothing in there so then i go back to i just keep trying to find a way around and then i go back to what you did in the first place you knew you didn't file it on time you tried to get something done it didn't work so now you're trying to turn the thing on and say well what we're asking for does is if you look at the fish case which is to baptise from two thousand and eleven they said that an informal proof of claim requires five elements it's got to be in writing it's got to be timely it's got to me by or on behalf of the creditor it's got to be submitted to the court and it has to say the amount and the nature of the claim that all your argument then has to be that the schedules filed by the debtor were filed on your honor how do i say that they were filed on your behalf because i think if we take your argument and rule for you it sounds as though anything they file does on your behalf that they might have filed without these debts but i don't think the order i don't think they really wanted to pay it to you i don't think they were acting as your agent well we don't argue that they're acting as an agent or are we argue they're acting in the same capacity as they would have under oath rule three thousand and four if they submitted a proof of claim on behalf of the debtor and but that's a different proposition that if you finally approve a claim on behalf of the debtor you really are acting as the agent with respect to that act well i think that you're complying with the rule in respect  notice i don't know that you're acting as the agent what you're doing that you're putting people on notice that this debt is out there and needs to be treated in a certain way it's amount and nature and i think in this case all of the arguments with regard to the failure to follow the formalities of that rule applied to three thousand and two and three thousand and four equally and this circuit has said that you're excused if you fail to follow three thousand and two to the letter so long as the substantively you followed and there's no prejudice to anyone if i look at three thousand and four three thousand and four says the debtor files a claim half to the time the creditor could have filed it that didn't happen  well isn't the way we look at is it early for not the way we look at it the rule that breeds the rule the rule says the debtor may file it after the time the creditor had to file it that didn't happen logical to refuse to recognize or allow a claim just because it's early under rule three thousand and four and we may argue the same thing here judge is that it's because it's not disputed and because it's liquidated there's no prejudice to anyone by submitting it out there early and if that if there is prejudice in our name and doesn't hold but rule three thousand two there is certainly prejudice i don't have to pay if you don't file a proof you don't get anything well it and therefore they get to give it to other people and that but themselves that's prejudice well that up to the applies equally well to three thousand and two and we certainly understand it does but what i'm trying to do is each one of these things that you j that you then approach me with i tried to look at to see if i could get there and you've heard what i said about three thousand and four i asked the question you heard what i said about the listing of the dead as an informal proof a claim there's to comply with what you've got to do to get their end of the under the arguments you made hundred under the judicial of many missions doctrine i said to myself you know i'm i buy that doctrine if congress hadn't already said in eleven what schedules would mean but left out of thirteen they didn't want to do missions in thirteen or they want to put them in there well your honor it's our view that they may not have considered judicial admissions in and of undisputed that's exactly what eleven does isn't it says a claim filed under five zero one for any claim that appears in the schedule is filed under five twenty one  well that's correct your honor but it doesn't we don't think that it precludes under thirteen for the substance of governor over the form and that's what the argument here is as do we it seems to us that running substantively you're allowed to the cases should be decided on the merits substantively and if there's no prejudice by a failure to file a civil rule then that rule should be should not be strictly construed and imposed without exception in this particular case that if you look at the trustees briefing if you look at the debtor's briefing if you look at the bankruptcy court decision if you look at the bad decision nobody points to any prejudice in the late filed claim the only prejudice that could be argued even theoretically was you know we have to pay a debt that we admit that we owe it seems to us that's not undo prejudice and furthermore with respect to the other creditors with under rule three thousand and two an informal prince of claim does the same thing to other creditors which means which says that other creditors have to participate pro rata with the late fall claimant and so consequently again there's no undue prejudice because creditors should expect that they're going to share pro rata with water which is distributed through the bankruptcy plan and so rather than what the argument is is that this windfall that the  creditors get because of a failure to file a proof of claim the law says that when fall is prejudicial to them and our argument that that does not consist of prejudice they simply got a windfall because of a failure to follow a procedural rule and now they and we argue they shouldn't get that when fall because in substance there is no prejudice to anybody's ability to get justice on the merits on the actual merits of who owes what to whom and what is the amount of the claim and the nature of the and ultimately what the argument here is to extend the three thousand to exception that's the informal perfectly rule two claims that are listed in schedules under oath as liquidated and undisputed and you know you know you might have ice understand all the policy arguments the trouble is you've got a statutory and rule structure that doesn't help you know very well it agreed your honor and our only argument is that's true for three thousand and two and it's been the law on the circuit for over fifty years that you could get an exception from that if certain elements are met and we think in substance there met here for three thousand four as well let's hear from the other side and you say something thank for the record my name is bob drummond i'm the appellee here in the chapter thirteen trustee at the bankruptcy court level here's the fundamental problem with the credit unions argument and it goes back to the schedules schedules can an informal proclaim because the president here in this circuit says if there's a five part test that there has to be a presentment in writing within the time for filing the claims by or on behalf of the creditor and the schedules aren't biled by or on behalf of the creditors and the schedule serve a completely different purpose than the proof of claim as well as the trustee when i'm in venice during the terms of this confirmed chapter thirteen plan i make disbursements on claims on allowed claims the code or the rules say that i can make a disbursement on allowed claims the plan says that i can make it disappear is not allowed claim and the fact that the schedules recognize that a debt exists doesn't also stand as a statement by the debtor that that's going to be paid in the chapter thirteen case i pay allowed claims i don't pay on debts so the debtor complied with her obligation in this case by filing schedules and completely and accurately listing all of the creditors but she was not filing those for the purposes of  assuring that everybody that was listed in the schedules would receive a dispersant of the plan and in fact it's common in chapter thirteen that creditors are listed the don't file claims in those cases once the plan is confirmed practice you said that it's fairly common in chapter thirteen proceedings for creditors not to file claims even though they have them how does that it could be for a variety of reasons they may not use courts recognize that when we do these chapter thirteen cases we're making plan payments to creditors over a period of from thirty six to sixty months ordinarily i would guess that some of these creditors just don't want to deal with that over a five year period some of the unsecured creditors don't get paid until the end of the plan so it may be a month fifty eight or fifty nine before they start receiving their dispersants so i can't speak for the creditors but i can say that that i would surmise that that many of the creditors that don't appear to have some particular reason for making that decision it's not required to file a proof of claim this particular debt however doesn't fall within any of the category you just well like for example a disgruntled employee she could have said that and it made a difference to the debtor in this case she's a physician and she's making large plant payments and her plan contemplated payment of all out claims in full so it made a difference to the debtor in the total funding of the plan whether or not this claim was allowed and you don't have to fund or plan as much because the claim wasn't filed in a timely fashion i want to talk about that allowed for a little bit if i were to say that the debtor puts it on their schedule it's automatic and it would seem to me if i were the debtor i wouldn't put any claims on my schedule because then when they have to pay anybody and they have to come in and file or claims all the time or they wouldn't get anything what havoc does that play in the chapter thirteen plan well it would probably play havoc in this fashion ultimately with the discharge and the credit it's going to get discharged has to be provided for and without notice to the creditor wouldn't be provided for in any fashion by the chapter thirteen chapter thirteen plans are different than chapter eleven chapter thirteen plans are different because the debtor comes in they file or schedules then it's naturally assumed that all the creditors who want to payment will file a proof and then one is allowed or disallowed and the payment started happening under the plan and so therefore the whole process is to get the plan paid and paid as soon as it can be paid and get everybody paid as much as they can as quickly as they can in order to get the thirteen debtor through because it's really a reorganization of the working stiff debtor correct it really is correct and so therefore if we were to say in the midst of this that just putting you on the schedule is enough to say your claim the claim is valid then at that point debtors could say well i'm not going to put them on there so therefore they will not be paid and that would destroy the whole process we're trying to do in the chapter thirteen plan would that would and i think you correctly recognize probably the basis for congress having section eleven eleven and the senate report in  seventy eight said that the schedules could serve as the claim because in chapter eleven the schedules are usually accurate in chapter thirteen we're dealing with a different debtor we're dealing with a consumer debt ordinarily sometimes a small businessman sometimes a sole proprietor but usually a consumer debtor who's not sophisticated in the fashion that a chapter eleven debtor ordinarily would be when the debtor files their schedules however they're required thirteen case and that's the problem in this case is that the creditor didn't show up until it was too late mr quick mr rhodes made one reference and i made a couple references to prejudice i would just offer this that  allowing the claim in the fashion contemplated by by the credit union would be prejudicial to the creditors who showed up on time and filed their claims in a timely fashion to allow it then would dilute the amount that was to paid to the other unsecured creditors the court the debtor would either have to increase their funding to pay everybody in full or the allowed claims to timely file claims would get paid  hundred percent of what they're owed under the plan that in this instance as i understand with this particular debtor the failure to file the claim did it was good for that debtor the debtor didn't have to pay because they pa everybody else in full is correct and at the end of the case if she completes the plant the discharge order will apply to the creditor and the debt will get discharged with no pay you have prejudices a hard word to define sometimes you're defining prejudice as she'd have of chapter thirteen plans fail and they drop into chapter seven and in montana probably forty percent of the cases are actually go through to discharge and unless there any other questions from the panel i'll conclude my argument in the bank  think you have a couple of minutes here are that what i'd like to address is is these arguments for why the informal proof of claim analysis should apply to rule three thousand and four are the same arguments as to why they wouldn't apply to three thousand and two in other words in a chapter thirteen plan we have an unsophisticated debt or we have a need to pay off creditors we have a concern that we may slip back into seven sixty percent of the time ninety five percent of time we don't have a full payment of all claims that's true also for the analysis under three thousand and two that still allows amendment of informal proofs of claim and those cases that go back to the one nine hundred sixty says if there's anything that indicates that there's another claim out there then we're going to allow that and consider on the substance not mere procedure so long as there's no prejudice to any one in and that is our argument is that payment of a debt that you wait a minute that you owe is not prejudicial not different in that for example if you put in your schedules a disputed debt or something that's not been liquidated then you say i made the oh that but not that much or i don't owe that at all and you put that into your schedule to give that creditor notice to come on in here unless dispute it we would submit that that's a different set of circumstances than if you're a creditor excuse me you're a debtor you're allowed under three thousand and four to submit claims on behalf of the creditors and you do that in the form of telling the court under oath that i owe this money and i agree that i owe this money then if a creditor comes in in a circumstance a circumstance like this and has made a procedural error which we did in this case and ask for forgiveness of that since in order to participate in a plan when there's money to be paid it's the same as if a creditor comes in and hasn't submitted the formal proof of claim under three thousand two in all of the arguments that says well three thousand four you shouldn't be allowed that because you missed the deadline apply equally to three thousand two and since this court allows people under three thousand two to have that forgiveness of the sin then