When we file your Chapter 13 case, we will include in that filing proposed plan of repayment.  This plan sets out specifically when your creditors will start getting paid and how much each will receive each month.  Your plan will also set out how much secured creditors will receive prior to confirmation.

Remember, your plan will not be formally approved, or confirmed, by the judge for about 6 to 8 weeks after the date you file. Thus, while you will be protected by the automatic stay, creditors are not yet permanently bound to the provisions of your plan.

Your plan must provide on-going payments to creditors during this pre-confirmation probation period.  Under Chapter 13 law, secured creditors have the right to expect adequate protection payments while your plan is being considered.

During the four to six week period that your plan is pending but not yet approved, the Chapter 13 trustee and creditors can file objections to confirmation.

Chapter 13 trustee objections are very common in Chapter 13 cases – it is my job as your lawyer to cure the trustee’s objections by the confirmation hearing, which is about 2 months after filing. Most trustee objections follow the 341 meeting of creditors and relate to things like un-filed tax returns, lack of funding of your plan, or differences between your testimony and what is scheduled in your petition.  A “funding” objection is the most common trustee objection.  Your trustee will file a funding objection if your plan payment becomes delinquent.

Creditor objections are less common and may relate to a lack of insurance on secured collateral like a house or car. Creditor objections are usually designed to push you to modify your plan to pay more each month to the objecting creditor, but there are other reasons that creditors can object as well:

  • Monthly payments too low – obviously every creditor in your case wants to get paid as much as possible in the shortest period of time.  Secured creditors (usually vehicle lenders) sometimes object citing the reason as adequate protection.  Essentially, they will argue that the collateral (such as a motor vehicle) is depreciating faster than payments would be coming in as part of your plan.
    • This type of objection can usually be cured by increasing the monthly allocation to the objecting creditor
  • Plan running too long – if you underestimate the outstanding balance due a particular (secured creditor), your plan may run longer than 60 months.
    • This type of objection can usually be cured by increasing your trustee payment, or surrendering the collateral back to the creditor.
  • Plan Filed in Bad Faith – if this is your second or third bankruptcy filing, or if you filed within a few months after making a large purchase, a creditor may object.
    • This type of objection can usually be cured by agreeing to a period of “strict compliance” whereby any default in trustee payment will result in an expedited dismissal procedure.

There are a few other reasons why a creditor might file an objection but the reasons listed above are the most common.  Fortunately, creditor objections in Chapter 13 cases are somewhat uncommon – most of our effort will be focused on resolving objections filed by the Chapter 13 trustee.

About 

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need bankruptcy protection. Call him at 770-393-4985 for a confidential discussion.

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