This legal guide discusses objections to Chapter 13 Plans in Chapter 13 Bankruptcy cases.
What is an objection to the Chapter 13 Plan?
Not everyone may be happy with the Chapter 13 Plan you have filed. For a number of permissible reasons discussed previously and below, the Chapter 13 Trustee or any creditor may have a beef with you about the plan contents. The proper way to voice one's rejection of the plan is by filing an "Objection" with the court. If there are no objections to the Chapter 13 Plan you have filed, congratulations! It is now ready for the judge's stamp of approval which is a process called "Confirmation of the Chapter 13 Plan". The more experienced an attorney is at filing Chapter 13 Plans, the more likely they are to get them confirmed quickly. However, bankruptcy law continues to be in a state of flux and even experienced attorneys can be challenged from time to time in the Chapter 13 cases they file.
Objections by the Chapter 13 Trustee or Creditors to the Plan
Pursuant to Section 1322, of the Bankruptcy Code, the Chapter 13 Trustee or any creditor may object to the Chapter 13 Plan any time prior to confirmation for any of the following reasons:
The Plan is Not Feasible
The Trustee or Creditors can object if the Chapter 13 Plan is not feasible, i.e., there is insufficient income to support the required plan payments or that the plan itself does not adequately provide for all required claims in the required amounts.
The Plan Has Not Been Filed In Good Faith
The Trustee or Creditors can object if the Chapter 13 Plan is not in good faith, for example, the Debtor has filed a plan they could not possibly afford, or perhaps offers less to creditors than they can afford to pay.
The Chapter 13 Plan Unfairly Discriminates
The Trustee or Creditors can object if the Chapter 13 Plan unfairly discriminates; an example of this would be creating a separate class for student loans; a creditor might object to student loan creditors receiving a higher percentage under the plan than other unsecured creditors and that therefore the plan unfairly discriminates.
The Plan is Not In The Best Interest of Creditors
The Trustee or Creditors can object if the Chapter 13 Plan is not in the best interest of creditors in that it does not pay them what they would receive in a Chapter 7 bankruptcy per Section 1325 of the Bankruptcy Code.
The Chapter 13 Plan Contains Errors
The Trustee or Creditors can object if the Chapter 13 Plan contains other errors; for example, maybe it is not the most current model chapter 13 plan required by the particular division in which it is filed, or maybe information is listed in the wrong section on the plan.