4 Collier on Bankruptcy P 502.03


Summary

  • [1] Overview of Section 502(b)

    Under section 502(a), a claim or interest, evidenced by a proof filed under section 501, “is deemed allowed, unless a party in interest … objects.” Section 502(b) states that if objection to a claim is made, the court, after notice and a hearing, “shall determine” the amount of the claim fixed as of the date of the filing of the petition. Some courts have interpreted section 502(b)’s mandatory language to require a judicial ruling on a creditor’s objection to a claim once a creditor objects to a claim. In that instance, the trustee cannot enter into a settlement agreement with respect to the claim before the creditor’s objection is heard and the allowable amount of the claim is determined.1Link to the text of the note Other courts, however, have concluded that a creditor’s claim objection does not deprive the trustee of authority to settle with the claimant, ...