Why does the Court tell creditors not to file a claim?

The form notices mailed to creditors at the start of a bankruptcy case by the Clerk of the Court in the Southern District of California instruct creditors not to file proofs of claim unless instructed by the Clerk in a later notice. The purpose of this is to avoid the expense and inconvenience to creditors and the Clerk which would arise if all creditors filed claims in cases where claims will never be paid. Since the vast majority of bankruptcy cases are “no asset” cases in which claims are never paid, this notice makes sense from that perspective. The problem is that an “asset” case may lie dormant for months or even years before the clerk sends a second notice asking that claims be filed. Although the first bankruptcy notice received by a creditor is usually attended to, subsequent notices from the Court may “slip through the cracks” in the creditor’s administrative process. The creditor’s address might change, records may become unavailable, etc. If you have a large claim in a commercial case and are concerned about these things, you should file a proof of claim. The Clerk will accept it for filing despite what the bankruptcy notice says.