By Ryan C. Wood
An objection to confirmation of a chapter 13 plan is how a creditor or the trustee assigned to administer the plan communicates to the court and the party proposing the plan that they believe the plan does not meet the requirements for confirmation or approval pursuant to section 1325 of the bankruptcy code. A chapter 13 plan is confirmed or approved by the bankruptcy court if it satisfies the requirements of section 1325.
The most common party that objects to the confirmation of a chapter 13 plan is the trustee assigned to administer the plan. Every jurisdiction has a standing trustee to administer all of the chapter 13 cases filed in their jurisdiction. In the Northern District of California there are three different standing trustees. Each trustee at some point will hopefully recommend the plan for confirmation if they believe the plan meets the requirements listed in section 1325 of the bankruptcy code. A plan can be confirmed or approved by the bankruptcy judge assigned to your case also and the trustee’ objection will have to be overruled by the court. The most common reason a trustee will object confirmation is because a creditor files a proof of claim for an amount owed that is different than what is scheduled in the bankruptcy petition and provided for in the plan. Your bankruptcy lawyer will have to file an amended plan to fix the problem.
Car Loan Company Objections to Confirmation
Car loan companies will regularly object to confirmation of chapter 13 plans because they disagree with the valuation of a car that is being paid in the plan. If the car was purchased 910 days prior to the filing of the bankruptcy case the plan only has to pay back the fair market value of vehicle and not was is owed on the loan. This can be a significant savings if the value of the vehicle is far less than what is owed. The percentage rate can be lowered as well. The car loan company naturally wants the value of the vehicle to higher and the bankruptcy filer wants the value of the vehicle to be lower. If your bankruptcy lawyer and the car loan company cannot agree to a value then there may have to be an evidentiary hearing before the court. The court will decide the value of the vehicle.
Mortgage Company Objections to Confirmation
The most common reason why a mortgage company objects to confirmation of a plan is because of missed mortgage payments and the dollar amount of missed mortgage payments in the proof of claim they file is more than what is listed in the chapter 13 plan. When mortgage payments are missed various late fees are added and if quite a few mortgage payments are missed then the mortgage company will set up an escrow account to pay the property taxes and insurance for the property. The amount owed in the escrow account seems to always be a point of contention in many cases.