The filing of a chapter 13 bankruptcy for an individual who is seeking to reorganize their financial affairs is anything but routine. Contained in the chapter 13 plan are provisions that will bind each and every creditor to a brand-new deal if not objected to. Creditors must read the chapter 13 plan and either accept their treatment under the plan or object to it if they do not like the way they are being treated. There is no sitting on the sidelines silently. It’s either speak up or accept the treatment that has been proposed.
When a Creditor Objects to the Plan
If a creditor objects to the chapter 13 plan, the bankruptcy judge will hold a hearing and make a ruling on how that creditor should be treated under the plan. All of the objections and debtor’s requirements need to happen before the confirmation of the chapter 13 plan. In other words, a chapter 13 plan cannot be confirmed with outstanding objections or creditors who have not accepted their treatment under the plan. Once that process is completed, a debtor’s chapter 13 plan can come before the court for consideration at a confirmation hearing.
Chapter 13 Confirmation Process
The confirmation process in chapter 13 is confusing and difficult. There is no other way to say it.
Under the bankruptcy code, a debtor must meet very stringent requirements to have their chapter 13 plan approved by the bankruptcy judge. Unless and until the debtor meets all of these conditions, the plan cannot be confirmed. The confirmation order will specifically state that the debtor has met all the requirements under the bankruptcy code to have their chapter 13 plan approved. The chapter 13 confirmation order is, in essence, a final judgment that binds each creditor to the terms stated in the chapter 13 plan.
Once the bankruptcy judge issues an order confirming the plan, the creditors are just as bound by the terms of the confirmation plan as the debtor is. The debtor is now required to fulfill the terms of the plan by making payments to either the chapter 13 trustee or the creditors in conformity with the terms and conditions of the order confirming the chapter 13 plan. Likewise, each creditor who is bound by the terms of the confirmed plan must accept not only their treatment under the plan but also the payments made by the debtor.
If you are considering filing for chapter 13 bankruptcy protection, you should have experienced chapter 13 bankruptcy counsel on your side. Failing to hire a bankruptcy attorney could be detrimental to the success of your case and make you pay more to your creditors than necessary. Unfortunately, our legal team from Dellutri Law Group has seen this outcome quite often. If you would like a complimentary strategy session to discuss filing for chapter 13 bankruptcy protection, please feel free to reach out to us.