If you’re currently involved in a Chapter 13 bankruptcy, it’s important to know that filing your plan with the court may not be the end of the process. In most bankruptcy cases, not all creditors will be paid. Needless to say, these creditors won’t be happy with your Chapter 13 Plan and may fight back.
The official method for creditors to dispute a Chapter 13 bankruptcy is by filing objections to the terms of the plan.
In my practice, I encounter a number of permissible objections that bankruptcy judges allow:
- The plan wasn’t filed in good faith. If a creditor feels that you would not be able to afford payments as outlined in the Chapter 13 Plan or if you have offered less than a creditor believes you should or could pay, you might be hit with a “good-faith” objection.
- The plan isn’t realistic. Similarly, if a creditor feels that you can’t make the required payments on your income or if the plan doesn’t cover all the necessary claims in the required payment amounts, an objection may result.
- Creditors’ best interests weren’t taken into account. Creditors may argue that under the Chapter 13 Plan they won’t receive what they would get in a Chapter 7 filing.
- The plan is discriminatory. Creditors might object if the plan provides what they see as unfairly high payment to certain types of debts, such as student loans, while shortchanging others.
- The plan has errors. With bankruptcy law constantly in flux, plans sometimes include errors such as not following the most-current requirements. Other details that could be considered erroneous include failure to list certain assets or loan details.
What Should You Do if You Receive Notice of Objections?
If creditors file objections in your Chapter 13 case, you’ll receive a notice of “objection to confirmation,” which is a written statement from a creditor or from the Chapter 13 Trustee that something with your case will need to be corrected prior to the confirmation hearing.
The first thing to do is to contact your bankruptcy attorney. I advise my clients not to panic in such situations and assure them that the process is common and routine. Your objection to confirmation notice will provide the reasons for the objections, which might include any of the possibilities cited above.
How Do I Handle Objections?
Although objections are common in Chapter 13 bankruptcy cases, they do require a proper response from an experienced attorney. In the vast majority of cases, I can easily take care of any objections, allowing your case to proceed. In some cases, I may make very small changes such as adjusting the applicable commitment period or updating a listing of loans.
My goal is to work out any potential objections in advance of your confirmation hearing. However, for any objections that arise later in the process, I work with the involved creditors to negotiate an agreement that’s acceptable to both sides. In the rare case in which negotiation doesn’t resolve the issues, the bankruptcy judge will rule on the matter. As the petitioner in the bankruptcy case, you should plan to attend your confirmation hearing. Because you are represented by an attorney, you likely will not need to attend your confirmation hearing.
For information about Chapter 13 bankruptcy, contact Wagner Law Office, P.C.
As I advise my clients, if you receive a notice of objections in your Chapter 13 case, don’t panic. Contact your attorney right away for an explanation and to have the objections addressed as soon as possible so that your case can proceed. For more information about the Chapter 13 process, please contact my office. The information in this article does not constitute legal advice, but Wagner Law Office, P.C., offers a free consultation.