What happens when there is an objection to my proposed payment plan in Chapter 13?
When a debtor files for Chapter 13 bankruptcy a proposed payment plan is presented and the Chapter 13 Trustee and creditors will review the plan to determine if there is anything for which they want to object.
The goal is to try to get everyone on board so there are no objections but sometimes there are things that need to be worked out. Debtors need to work with their bankruptcy attorneys to try to resolve whatever objections there are to the proposed plan. Sometimes there are no issues, but sometimes things need to be amended or modified in the proposed plan.
Objections by the Chapter 13 Trustee
The Chapter 13 Trustee will review the proposed payment plan and determine if “enough” is being paid and whether procedural rules are being followed in the plan.
It is not uncommon, especially in the Western District of Missouri, for the Chapter 13 Trustee to file a Motion to Deny Confirmation of the Plan. This means that the Trustee sees something that needs to be fixed. Often the Trustee may be correct on the issues, but not always, and if there is a disagreement, then the issues can come before the Court for the judge to determine how those issues will be resolved.
Ultimately, the Chapter 13 Trustee acts as a gatekeeper regarding the proposed payment plan and is essentially trying to make sure that the correct amount is paid to your creditors over the life of your plan.
After a case gets confirmed initially, there might be subsequent issues that require an amended plan. The Chapter 13 Trustee will review every amended plan and determine if there is anything objectionable.
Objections by Creditors
A debtor’s creditors (house lenders, vehicle lenders, unsecured creditors, tax authorities, etc.) also get an opportunity to review the proposed payment plan and an object. They would file a Motion Objecting to the Plan.
Sometimes there are issues with the valuation of a vehicle when a cramdown is proposed, or perhaps a creditor wants to receive a specific rate of interest according to the credit agreement, or perhaps the creditor’s claim amount is significantly different than what the debtor believed it to be.
Whatever issues there are, the debtor’s bankruptcy attorney will seek to resolve them with creditors to get to an agreeable plan.
Most issues can be worked out, but sometimes the issues need to come before the Court, just like with the Chapter 13 Trustee, to get a resolution.
For more information, contact us today.