Christaphor John Masiclat

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UNITED STATES BANKRUPTCY COURT
DISTRICT OF HAWAII
In re:
CHRISTAPHOR JOHN
MASICLAT,
Debtor.
Case No.: 23-00211
Chapter 13
Related: ECF 39
ORDER REGARDING TRUSTEE’S MOTION TO
RECONSIDER AND DISALLOW CLAIM
The standing chapter 13 trustee moves under 11 U.S.C. § 502(j) and
Fed. R. Bankr. P. 3008 and 9006 to reconsider and disallow an allowed
claim held by FinWise Bank (“Creditor”).
The trustee states that all distributions mailed to the address on the
Creditor’s proof of claim were returned as undeliverable, and that the
Date Signed:
May 6, 2026
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Creditor has not provided a corrected address despite multiple requests.
On November 17, 2025, the trustee instructed the Creditor to file corrected
change-of-address forms within 30 days and stated that failure to comply
would result in a section 502(j) motion or deposit of the undeliverable
amounts into the court’s unclaimed funds registry. The Creditor did not
file a corrected address. The trustee now seeks disallowance so the
accumulated funds may be distributed to other creditors.
The trustee has chosen an inapplicable procedural basis for his
request. If a creditor files a proof of claim, the claim is “deemed allowed”
unless a party in interest objects to the claim.1 If a party files an objection,
the court must determine the amount of the claim under applicable
nonbankruptcy law and allow the claim in that amount unless certain
exceptions apply.2 In other words, the bankruptcy court does not have
unfettered discretion to disallow claims based on generalized notions of
equity.
1 11 U.S.C. § 502(a).
2 11 U.S.C. § 502(b).
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If the trustee had filed an objection to the claim, the trustee would
have lost. Section 502(b) provides the exclusive grounds for disallowance,
and a creditor’s failure to update its mailing address is not among them. A
creditor’s failure to provide an updated mailing address does not
invalidate the creditor’s claim under applicable nonbankruptcy law and
does not invoke any of the statutory exceptions to allowance.
But the trustee did not file an objection to the claim. Instead, he filed
a motion for reconsideration of the allowance of the claim. This position is
based on the premise that the trustee seeks “reconsideration” of the
“deemed allow[ance]” of the claim. This position arguably benefits the
trustee because section 502(j) provides that, if the court finds “cause” to
reconsider the claim, “the reconsidered claim may be allowed or
disallowed according to the equities of the case.” The trustee suggests that
this language gives the court broad discretion to disallow the claim on any
equitable ground.
Read carefully, section 502(j) does not apply to a claim that is only
“deemed allowed.” The section speaks of “reconsideration” of a claim. But
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a claim is deemed allowed simply by being filed, without any court review
or consideration. It makes no sense to “reconsider” a claim that the court
has never “considered” in the first place.
Rule 3008, which implements section 502(j), makes this clear. The rule
authorizes parties in interest to “move to reconsider an order allowing or
disallowing a claim.”3 Because there is no order allowing the Creditor’s
claim, there is nothing to reconsider under section 502(j) or Rule 3008.
Allowing Rule 3008 to disallow a “deemed allowed” claim would
make irrelevant the carefully drawn provisions of section 502(b). Parties in
interest could always argue that the court should disallow a “deemed
allowed” claims on equitable grounds, even though none of the exceptions
of section 502(b) apply.
The trustee’s frustration with the Creditor’s unresponsiveness is
understandable. But Congress has provided a specific mechanism for
undeliverable distributions. Under section 347(a), when a distribution
cannot be delivered, the trustee must deposit the returned payments into
3 Fed. R. Bankr. P. 3008.
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the court’s unclaimed funds registry. These funds do not escheat and
remain available indefinitely for the creditor to claim.4 Unless and until
Congress enacts a different statutory scheme, this is the sole remedy for a
creditor’s failure to provide a current address for distributions.
Because section 502(j) and Rule 3008 do not apply in the absence of
an order, and because the Creditor’s failure to update its address does not
render its claim unenforceable or otherwise disallowable under section
502(b), the trustee’s Motion to Reconsider and Disallow Claim is DENIED.
The trustee shall deposit any undeliverable distributions into the
court’s unclaimed funds registry pursuant to section 347(a).
END OF ORDER
4 28 U.S.C. § 2041 provides for the deposit of unclaimed funds “in the name and to the credit” of the
court. No money deposited under section 2041 can be withdrawn except by order of court. 28 U.S.C. §
2042.
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