A recent case decided in the sixth circuit court of appeals outlines what is considered “reasonable” inquiry under Rule 9011(b) and what documentation is required to support a proof of claim filed which is not listed on the bankruptcy petition.  Rule 9011(b) requires when filing documents with the court, the party filing is, “certifying that to the best of the person’s knowledge, information, and belief”, the documents filed are supported by facts.  Further, under rule 9011 a party filing documents without “reasonably” inquiring into the factual basis is subject to sanctions.  In the context of filing proofs of claims the issue may arise when documentation supporting the proof of claim is difficult to obtain or nonexistent and does not appear on the bankruptcy petition.  A creditor filing a claim may be subject to sanctions if they file an unsupported proof of claim.  To avoid potential sanctions creditors should keep in mind the following guidelines and procedures for filing a proof of claim and claims regarding debt not scheduled on a bankruptcy petition. 

First, a creditor if a debt purchaser should make sure the purchase agreement contains an explicit representation and warranty from the seller that the accounts being purchased are valid obligations of the debtor.  Including these terms in the purchase agreement demonstrate that the purchaser has acted in a reasonable manner to support evidence of the debt.  Second, the creditor should investigate the claim after purchase by researching the origins of the claim.  By contacting the debtor through mail to inform the debtor they have thirty days to dispute the debt owed will validate the claim and be considered sufficient investigation.  Third, before purchasing the debt a creditor should verify account information for flaws such as an invalid address or social security number.  If these steps are followed creditors and debt purchasers can avoid violations of rule 9011(b) and potential monetary damages.

The next question is once a creditor has “reasonably” investigated the claim under the sixth circuit standard what documents should they attach to the proof of claim.  The federal rules of bankruptcy procedure require that a proof of claim based on writing include a copy of the writing.  So if the origination document is available it should be attached to the proof of claim.  If this is unavailable the creditor must follow the “reasonableness” test outlined above to substantiate the claim and avoid sanctions under Rule 9011.  The creditor can also file a document explaining why copies of the originating documents are unavailable. 

The bottom line is that even if you attach nothing to a proof of claim if the above steps are followed a creditor can satisfy the “reasonableness” standard and avoid sanctions for filing unsupported claims.