In some bankruptcy cases creditors are allowed to file a claim asking the court to allow them to receive a distribution from the bankruptcy. In order to do so, the creditor needs to fill out an official form and submit supporting documentation. Given the number of claims filed, not all claims are closely reviewed. Citibank used a process known as robo-signing where a computer filled out and signed the form. The Department of Justice conducted an investigation and concluded this procedure violated the bankruptcy rules.
The Department of Justice’s U.S. Trustee Program (USTP) has entered into a national settlement agreement with Citibank N.A. (Citibank), Department Stores National Bank (DSNB) (collectively Citi), and FDS Bank requiring Citi to pay $5 million to remediate robo-signed proofs of claim filed in consumer bankruptcy cases in connection with more than 71,000 Macy’s-branded credit card accounts,
While this is an important step to curb some of the collection practices used by big banks, I fear it is not enough. Reviewing claims could have an impact on your case. You should make sure your attorney fully understands the claims process and how it could effect you.