Chapter 13 bankruptcies are repayment plans based on the debtor’s ability to pay. When meeting with your attorney you will discuss your monthly budget: income and expenses, and determine a proposed monthly payment. Once the petition is filed, a creditor’s meeting and confirmation hearing will be scheduled. Prior to the confirmation hearing, the creditors can objection to the confirmation of the plan.
Creditors object to the confirmation of plans for a variety of reasons. Typically creditors that object to a plan confirmation are secured creditors (Mortgage lenders, Vehicle lenders). When a secured creditor does not timely object to the confirmation of a plan it constitutes acceptance of the plan. Section 1325(a)(5) of the Bankruptcy Code governs the treatment of secured claims in a chapter 13 plan. Section 1325(a)(5) requires that a chapter 13 plan treat a secured claim in one of three ways: the secured creditor accepts the proposed plan, the treatment of the secured claim complies with section 1325(a)(5)(B), or the property secured by the claim is surrendered.
To satisfy the requirements of section 1325(a)(5)(B), the plan must provide the following: the secured creditor retains its lien, the secured creditor receives funds having a value of its collateral, and distribution of funds to the secured creditor, if in periodic payments, those payments must be in equal monthly amounts.
If a debtor is waiting on funds to make a larger payment into the bankruptcy- bonuses, stocks sales, going back to work-and upon receipt of those funds the debtor plans to pay a portion of the funds into the plan (lump sum) for the secured creditor, the creditor may object to the plan confirmation. The creditor may object because they are not receiving the funds in equal monthly amounts but are instead waiting on the debtor to make a large lump sum payment at some point in the future.
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Many times the debtor and the objecting creditor can reach an agreement concerning the objection and move forward with the confirmation of the plan. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.
