It happens all too often. A debtor files for bankruptcy protection, the
deadline to file a proof of claim in bankruptcy passes, and the creditor has
taken no action to recover from the bankruptcy estate. Is the creditor out of
luck? Perhaps not, if the creditor has a claim for which the debtor maintained
liability insurance.
Generally, to retain its claim against a bankrupt debtor, a creditor must
file proof of its claim in the bankruptcy proceeding within a specified time.
When a creditor fails to file notice of its claim, the Bankruptcy Code's
permanent injunction prohibits the creditor from proceeding against a debtor
post-bankruptcy.1 Specifically, section 524(a) of the Bankruptcy Code
operates as a "discharge injunction" against any act to recover a
pre-bankruptcy debt from a discharged debtor personally.
