In a Chapter 13 bankruptcy, can creditors simply refuse a repayment plan?

Question

A friend of mine has switched from a chapter 7 to a chapter 13 bankruptcy. he has come up with a repayment plan, but recently, he tells me that the creditors have rejected it.

can they do that? can the judge make them accept? I don't know anything about bankruptcy law, but i want to look up a few cases that will help my friend out.

any help pointing me in the right place to start is appreciated. I have access to westlaw and lexisnexis.

thanks!

Answer 1

Creditors do not get to vote on a Chapter 13 plan. The debtor must propose a repayment plan and the court will confirm the plan if the debtor proposes the plan in good faith. If the court confirms the plan, the creditors really don't have a choice. The confirm plan is a court-ordered repayment. If the debtor makes all the payments required under the plan, then the debts will be discharged.

The creditors can file a motion objecting to the confirmation of the plan for a variety of reasons. If the court sides with the creditors and denies confirmation, then the case will be dismissed.

Answer 2

Thats odd.....Usually creditors like the sound of a chapter 13 instead of a chapter 7 since they will be payed back something. It may not be the full amount that they are asking for, but the thing is, in a chapter 13 bankruptcy, you only pay a percentage of what you have left of your monthly income to unsecured creditors. If they don't want to file a proof of claim before the confirmation date, then they will be discharged at the end of the chapter 13 plan. If they object to the confirmation of the plan the will set a hearing before a judge to then decide whether to just confirm or set another confirmation hearing in the future.

Answer 3

Under the new code, if a Chapter 13 creditor will receive nothing under the plan (which happens frequently), then can contest the plan. Will this automatically stop the plan from being approved by the judge? Doubtful. If the trustee approves of the plan, and your attorney is there for the hearing, the creditor will have to show something (and I have no idea what they could show, other than fraud) to make the judge say no.

*do not take anything I say as legal advice-though I am an attorney, I doubt that we are in the same state, and it would be illegal for me to give you legal advice

Answer 4

They can definitely reject the plan within reason. The law requires that the creditor would receive at least as much as in Chapter 7 and that they receive a "meaningful payback." They can object to the plan if they believe it fails to meet these criteria, but the judge will ultimately decide whether or not the plan is fair.

Answer 5

Yes they can object to the plan and show cause why they object. What they are probably objecting to is how the payment is being broke up. They want a bigger chunk of the payment.

They aren't really objecting to what your friend is paying.

I run into this with Mortgage companies normally due to discrepancy of the amount due. Or something along this line

This is only an guess

Answer 6

In a Chapter 13 bankruptcy, can creditors simply refuse a repayment plan?

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