An objection to confirmation is a response filed in a chapter 13 bankruptcy to an original or amended plan that is filed in the case. When you file a chapter 13 bankruptcy you fill out a petition, schedules and a number of related documents. These are really disclosure documents. They tell everyone involved who you owe as well as your income and expenses. In addition to those documents you file a chapter 13 Plan. The Plan tells your creditors, the trustee, and the court what you are planning to do in your case, how much the payments will be, and how long the case is expected to run.
The plan has to meet certain minimum requirements that are outlined in the bankruptcy code. It must deal with all the creditors that are in the case in one way or another. When your attorney is putting your case together they will divide out the different types of creditors. There are basically secured creditors (home loans, car loans and any loan secured by property), unsecured creditors (medical debt, most credit cards, and personal loans), priority creditors (past due child support, spousal support, and income tax debts less than three years old). These are not the only categories available but they are the basic ones.
The plan that is proposed is mailed out to all the creditors in the case. A hearing is set for the plan to be approved by the court. We use that term to mean confirmation when we are talking about the court approving the plan. The confirmation hearing is set no later that 45 days after the meeting of creditors. The meeting of creditors is the first hearing (and often only hearing) that you attend with the trustee.
A creditor or the trustee will look at the plan you are proposing and how it treats everyone and they might object. For most creditors the objection is about whether or not they are being treated correctly under the law. For the trustee the objection is usually about how a class of creditors is being treated and whether the plan complies with the requirements of the law on the whole.
Regardless of how the objection is framed or who is making the objection it is not a motion or request to dismiss the case (that is a separate but sometimes related issue). If their is an objection filed the plan can still be confirmed as filed if the bankruptcy Judge finds that the objection is without merit.
Often creditors will object quickly because they are trying to preserve their rights. The bankruptcy process moves very quickly and a creditor may need to object to prevent the case from being confirmed quickly. Many of these objections can be settled without issue once the creditor or the trustee has had time to examine the case or determine that the plan is sufficient. They will often ask for a continuance on their objection so they can do some investigation of things. It is very common to see these types of objections while things are getting sorted out.
Sometimes the objection is about how much a creditor is being paid on a secured claim. This is a common issue with car creditors where you have had the car for more than 910 days and you are trying to pay the value of the vehicle through the bankruptcy plan. If you file a case in Kansas you will likely propose a value based on the Kelly Blue Book private party valuation or an NADA mid-book valuation. Most attorneys that practice bankruptcy see these as starting points for determining the valuation. If the creditor things the values are off then they can object. Normally they attach their valuation to the objection so you can see why they are objecting.
These objections are often settled by exchanging information like the mileage on the vehicle, pictures of the condition, estimates of work that needs to be done. If the objection cannot be settled then the bankruptcy Judge will set a hearing and determine the value that will be used in the case. This is normal for any issue about the value of property.
The trustee might object because they believe you do not have enough income to fund your bankruptcy plan. This is known as a feasability objection and it might require you to make payments for several months before the trustee is satisfied you can handle the payment in the case. You might also need a hearing so you can show the court that you are capable of making the payments by explaining your budget in detail.
A trustee might also object because they think you can pay more into the case. This is often an based on your disposable income or your household income and expenses. The trustee might think you income is more than stated or that your expenses are l
These are only a few of the objections to confirmation that you might see in a Chapter 13 bankruptcy. It is very important to understand that because someone objects it does not mean that they are correct and you or your attorney are wrong. It does mean that if you cannot settle things you might have to ask the court to decide who is right.
If the court determines that the objection has merit and should be upheld it does not mean your case gets dismissed. Instead you have an opportunity to file an amended plan. The amended plan should address the issue the court has with the case and propose something different that will hopefully meet the requirements of the law.
Although filing an amended plan is an option if the court upholds an objection to your plan there are many reasons to file an new plan that do not require the court to rule against your original plan. In some cases your attorney will file an amended plan to address the issues of creditors, the trustee, or the court. Sometimes there are several plans filed while the case is pending.
During the time it takes to get a plan confirmed you are still protected by the Automatic Stay and you are still required to make payments into the bankruptcy trustee. The fact that a plan has not been confirmed does not change any of the basic ideas in your bankruptcy case. It is often the details that are being sorted out.
Your bankruptcy attorney should always go over any objection to confirmation and let you know what can be done to handle it. Most of them will be routine and require additional work but should get resolved without a trial. A few will go to trial and your bankruptcy attorney will help you prepare for it.
If you have any questions or concerns about bankruptcy please reach out to us. We have bankruptcy attorneys in Wichita, Topeka, Lawrence, and Overland Park and consultations are free.