In a Chapter 13 case, the bankruptcy court must determine whether it should approve the debtor’s proposed repayment plan. Sometimes other parties who are involved in the bankruptcy will object to the plan. This may be the bankruptcy trustee or a creditor of the debtor. When someone raises an objection, the bankruptcy judge will hold a confirmation hearing to address it. If nobody raises an objection, the judge might simply review a confirmation order submitted by the debtor. In other cases, the judge might still want to hold a hearing to discuss the debtor’s plan with them.
A bankruptcy trustee might object to a repayment plan because they are concerned that the proposed payments are not adequate under bankruptcy laws. Or they might be concerned that the debtor will not be able to keep up with payments, based on their income. A creditor may object to proposed actions by the debtor, the trustee, or the judge. Disputes can arise over issues such as the debtor’s proposed payments, their claimed expenses, their right to discharge a certain debt, or the exemptions that they are claiming. In other situations, a creditor might object to a trustee’s plan to abandon an asset held by the debtor rather than sell it to pay creditors.
Objections to a General Discharge
Sometimes the trustee or a creditor will object to a debtor’s discharge in general. They must file an adversary proceeding within 60 days of the first date scheduled for the mandatory meeting of creditors. Succeeding in this type of objection involves showing egregious wrongful conduct by the debtor during or shortly before the bankruptcy, such as fraud, destruction of property, perjury, or other criminal or quasi-criminal actions. These types of objections are relatively uncommon.
Objections to Discharging a Specific Debt
More often, a creditor will try to prevent a debtor from getting a discharge for a certain debt. This objection may result from fraud, intentional wrongdoing, a theft crime, or other types of serious misconduct related to that specific debt. An objection also may result from less serious actions, such as omitting the debt from your bankruptcy documents. If the objection succeeds, only this debt will not be discharged upon the successful completion of the Chapter 13 repayment plan.
When you present your case at a confirmation hearing, you will be able to tell the judge why the proposed plan is legitimate and can succeed. The creditor or trustee also will be able to explain their position. You may not need to attend the hearing in person if you have an attorney, although courts in some areas require the debtor to attend as well so that the judge can question them directly. Sometimes a judge will schedule a hearing even if there are no objections to the plan. They may have concerns of their own regarding your ability to make appropriate payments to creditors.
A judge often will not make a final determination at the initial confirmation hearing. They might allow some time for the creditor or trustee and the debtor to reach an independent resolution regarding the objection. Eventually, the judge will decide the dispute if the parties cannot resolve it between them. This might involve an additional formal hearing at which the judge weighs evidence presented by each side, or the judge might make a decision on their own.