Objections to Chapter 13 Plan Confirmation
Accomplished California bankruptcy lawyers represent your interests
Chapter 13 is a bankruptcy process that allows a debtor to restructure debt. The debtor makes monthly payments based on his or her disposable income for three to five years and the court then discharges the remaining eligible debt. As part of the process, the debtor must submit a repayment plan for court approval. But other people with an interest in the bankruptcy case can also make their opinions known. The bankruptcy trustee assigned to the case and any of the creditors seeking repayment can file objections to the debtor’s proposed plan. At the Law Offices of Michael Jay Berger, our bankruptcy attorneys represent debtors and creditors in Chapter 13 proceedings. We draft repayment plans for debtors and defend them against objections. We also represent creditors, drafting and filing objections to plans that may violate the creditors’ rights.
Reasons why trustees or creditors file objections to Chapter 13 repayment plans
Chapter 13 exists to help wage earners get a chance to climb out from crushing debt by making partial payments to the best of their ability. Most objections to repayment plans, whether coming from a trustee or a creditor, assert that a debtor has not been fully forthcoming about his or her financial situation. Other objections might claim the plan is simply not realistic or workable. Common reasons for objections are these:
- The plan is not feasible — Here, the numbers don’t add up. The debtor doesn’t have sufficient income to make good on the promises to the creditors. In some cases, a creditor might assert that the plan has been offered in bad faith.
- A creditor (or class of creditors) is being short-changed — The plan unfairly favors some creditors and disadvantages others. In some cases, a plan might discriminate against creditors holding dischargeable debt in order to accelerate repayment of debt that cannot be discharged. The negatively affected creditors may object to this unequal treatment.
- The plan violates creditors’ rights — In Chapter 13, creditors have the right to receive at least as much as they would get if the debtor filed a Chapter 7. This is called the “best interests of creditors” test. If the plan looks like it would repay less than creditors could get from a liquidation of assets, creditors have the right to oppose it.
- The plan contains errors or mistakes — Accuracy is extremely important. Since the plan is an enforceable contract, parties must be satisfied that terms are correct and precise.
In most cases, the objections filed call for minor corrections, which can be made quickly to keep the process on track.
Impact of objections on the confirmation hearing
In Chapter 13 cases, the bankruptcy court holds a confirmation hearing to approve the plan. When the trustee or creditors file objections, the debtor receives notice and has time to resolve the issues before the hearing. If the parties cannot reach agreement before the hearing, they can present their arguments to the bankruptcy judge, who decides if the plan should be accepted as written or must be amended to earn approval.
Contact an accomplished California bankruptcy lawyer to manage your filings
Based in Beverly Hills, the Law Offices of Michael Jay Berger represents clients in all aspects of bankruptcy law throughout Southern California. To help ensure your filings are complete and correct, call our firm at 310-271-6223 or contact us online.