Chapter 13 bankruptcy involves the creation of a repayment plan. In this case, all nonpriority unsecured debtors are paid over a period of 3 to 5-years, some portion of the debtor’s disposable income to settle their dues. A bankruptcy trustee is assigned by the court to oversee the proceedings and to distribute the dues as per the repayment plan. However, the proposed plan gets confirmed only after the approval of the judge at the Chapter 13 confirmation hearing. However, bankruptcy lawyers of Dallas based law firm Recovery Law Group inform that there might be objections to the plan.
Who can object to the repayment plan?
30 days after the filing of bankruptcy papers, a meeting of creditors (known as 341 meetings) takes place. In this, all interested parties (debtor, his/her attorney, bankruptcy trustee, and creditors) participate and discuss the proposed repayment plan. They can review the said plan and even file an objection to it (which is followed up in the confirmation hearing).
The bankruptcy trustee needs to review the plan to check for compliance with bankruptcy laws. Apart from this, they are also required to check your income and expense documents to determine that the creditors are getting adequate repayment. In case you are paying less (than you can afford) to your creditors or your plan is not economically feasible, the bankruptcy trustee can object to the plan.
Though automatic stay prevents all collection actions, it doesn’t necessarily put an end to the misfortune of the debtor. In case a creditor is dissatisfied with your plan, they can object to anything including bankruptcy trustee’s proposed action, any claim filed by the debtor or the position taken by the judge. Some common reasons for objections in a bankruptcy case include –
- Expenses claimed by the debtor on Schedule J;
- Exempted property listed by the debtor on Schedule C;
- Proposed repayment amount by the debtor;
- Bankruptcy trustee’s stance of abandoning debtor’s property instead of selling it;
- Discharging of a specific debt or an uncollectible claim filed by another creditor;
- Fees demanded by any professional appointed by the court or the debtor’s lawyer.
Type of objections to the repayment plan
Amongst the various objections raised against those against discharge against any specific debt or the general discharge hurt debtor the most.
To file for general discharge objection, the creditor or trustee needs to file adversary lawsuit within 60 days of the date of the 341 meetings. To get a discharge dismissed, they also need to prove that any of the following acts took place during or before the bankruptcy case:
- Debtor defrauded a creditor;
- Either destroyed or lost necessary records;
- Hid, transferred or destroyed property which was part of the bankruptcy estate;
- Was unable to explain the loss of an asset;
- Perjured himself/herself
In case discharge is denied, the debtor remains liable for the debts after the dismissal of the bankruptcy case.
Every creditor is fending for themselves in a bankruptcy case, therefore it is not uncommon to find creditors objecting to discharge of specific debts during adversary proceedings. In case a general discharge is granted, then all nonpriority unsecured debts will be discharged except for that which was objected against. This leaves the debtor’s resources available for the creditor after the end of the bankruptcy case. A certain debt may be declared non-dischargeable if:
- If you forgot to mention it in your bankruptcy papers;
- If it was due to getting property or money by fraud;
- If it was done with malicious intent;
- If it was due to embezzlement or larceny;
- If it is a case of presumptive fraud (credit card charges for luxuries within 6 months prior to bankruptcy filing).
Confirmation hearing details
The confirmation hearing can be scheduled anytime within 45 days of the 341 meetings of creditors. Objections to the plan need to be written and filed after creditors meeting. If there are no objections, a confirmation order needs to be submitted. In case there are objections to the plan, your attorney can represent and argue on your behalf (unless the judge specifically asks your presence). During the hearing, bankruptcy debtor and all objecting parties can argue about the merits of their plan. If the judge has any questions regarding the plan, they might seek clarification. Time is given by the judge to settle the matter amicably, if not, an evidentiary hearing is scheduled.
It is better to be prepared for any eventuality. Call 888-297-6023 to speak with experienced bankruptcy lawyers Dallas about how to get your bankruptcy discharged.