Chapter 13 Bankruptcy: Objections to Confirmation

In Chapter 13 bankruptcy debtors propose a plan to repay all or part of their debt. The plan states the names of the creditors, the amount owed on the claim, the interest rate, value of the collateral securing claims, and the treatment the creditor will be provided in the bankruptcy case. Secured creditors, priority creditors, and trustees review these plans carefully and if they don’t agree with how their claim is being treated they may file an objection to confirmation. Objections to confirmation do not mean that the plan is not going to be approved by the court or that the judge will dismiss the case. These types of objections mean that there are issues to resolve before the plan can be confirmed. They are a normal part of the process.

It is not surprising that creditors might file objections to confirmation. Establishing valuation of collateral can be difficult because debtors and creditors may not agree as to what property is worth, especially when it may affect how much each party pays or gets paid in the plan. When debtors’ propose a reorganization plan at the beginning of the case they rarely have all of the information about the claims available. Information about the claims is usually acquired through old bills and credit reports. If the creditor isn’t reporting regularly to the credit agencies then the information in the report may be out of date. Claims that accrue interest may be changing daily, so even when the creditor is reporting to credit agencies regularly it is unlikely that the debtor will have the claim amount correct in their original plan.

After an objection to confirmation is filed the debtor’s bankruptcy attorney may resolve the issue through an agreement with the party objecting to confirmation or they may choose to let the bankruptcy judge decide the issue at a hearing. Once all objections are resolved, the Chapter 13 plan will be confirmed assuming the debtor has met the other requirements for confirmation as set out by the local rules of court in the district within which the case is filed.