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UPDATED: Six Reasons to Object to a Chapter 13 Bankruptcy Plan

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Six Reasons to Object to a Chapter 13 Bankruptcy PlanOriginally published: January 25, 2018 -- Updated: April 25, 2022

UPDATE: In addition to understanding the situations where it may be possible to object to the confirmation of a Chapter 13 repayment plan, creditors will need to know the procedures that will need to be followed in these cases. If valid objections are made, a debtor may be required to file an amended plan, and in some cases, a bankruptcy case may be dismissed altogether. 

Generally, creditors must make objections to a repayment plan at least seven days before the date of the confirmation hearing where the court will make a decision on whether to approve the proposed plan. Oral objections may be made at the first meeting of creditors (the 341 hearing), or written objections may be filed with the court. If no objections are made within the required time limits, the plan will be considered to have been filed in good faith, and it will usually be approved.

If a written objection is filed, it will need to be served to the debtor, who will be required to respond to the objections. The debtor may respond by filing an amended repayment plan that addresses the creditor’s objections, or they may file a response in which they provide explanations addressing the issues raised and ask the creditor to reconsider and withdraw the objection.

If you are a creditor who needs to respond to a proposed repayment plan in a Chapter 13 bankruptcy, Walinski & Associates, P.C. can advise you of your rights and options. We will make sure you meet all legal requirements when making an objection to the confirmation of a plan, and we will work to protect your interests as you pursue repayment of debts. Contact our Chicago creditor representation in bankruptcy lawyers at 312-704-0771 to arrange a consultation.


When facing bankruptcy, some debtors prefer filing for Chapter 13 bankruptcy instead of Chapter 7 bankruptcy. A well-constructed Chapter 13 repayment plan can prevent property foreclosure and repossession while clearing the filer of debt obligations. Creditors can benefit from Chapter 13 bankruptcy, as well, but only if the debtor creates a fair and reasonable plan. Creditors must examine repayment plans for possible objections before the plan reaches its confirmation hearing. Failing to object in time allows an unjust repayment plan to become legally enforceable. There are several objections that a creditor can make before the plan is confirmed:

  1. Understated Debt: A debtor’s proposed repayment plan may exclude certain debts that he or she is required to repay. Priority debts must be part of the repayment plan. Mortgage and auto payments may also need to be included if the debtor wants to keep the related properties.
  2. Insufficient Payments: Unsecured creditors must receive compensation from the repayment plan that is at least equal to what they would have received by liquidating properties in Chapter 7 bankruptcy. This is the tradeoff that debtors must make in exchange for keeping those properties.
  3. Withholding Disposable Income: Plan payments must use whatever income is left over after necessary living expenses and other financial obligations. Some debtors will try to hide how much money they make so they do not have to repay as much of their debts.
  4. Unsustainable Payments: A repayment plan should be based on what the debtor will realistically be able to afford. The plan may fail if the debtor cannot prove he or she will have the income to maintain those level of payments.
  5. Unqualified Debtor: A debtor is allowed to file for Chapter 13 bankruptcy only if he or she meets certain requirements. The debtor does not qualify if he or she has insufficient disposable income, is behind on income tax payments or has debts that exceed the legal limit.
  6. Bad Faith Plan: The debtor must be honest and fair with his or her creditors when creating a repayment plan. Any evidence that the debtor tried to deceive his or her creditors may terminate the plan.

Contact a Chicago Creditor's Rights Lawyer

If the court upholds your objection, the debtor will have to revise the plan or abandon filing for Chapter 13 bankruptcy. The debtor may still be able to file for Chapter 7 bankruptcy if he or she does not qualify for Chapter 13. A Chicago creditor’s rights attorney at Walinski & Associates, P.C., can identify objectionable aspects to a debtor's bankruptcy repayment plan. To schedule a consultation, call 312-704-0771.

Sources:

http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

https://www.law.cornell.edu/rules/frbp/rule_3015

https://www.uscourts.gov/sites/default/files/b_113_and_cn_0.pdf

Illinois Creditors Bar Association Chicago Bar Association Illinois State Bar Association
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