Chapter 13 Repayment Plan: A Creditor's Objection

A Chapter 13 bankruptcy has several requirements that must be met. One of those is that you and your attorney must submit a repayment plan that details how your debts will be paid. In most instances, creditors are willing to accept payments according to the repayment plan. However, some creditors do object. Before filing, here is what you need to know about creditors' objections.

Why Would a Creditor Object?

There are several possible reasons that a creditor could have for objecting to your Chapter 13 filing. One reason is that the creditor believes that your suggested repayment plan is not feasible. If your income will not be enough to cover the plan, the creditor could be fearful that the debt could be discharged at a later date by the court. 

The creditor could also object if it feels that your plan was not submitted in good faith. For instance, if your suggested payments are far less than you can afford to pay, the creditor could argue you are not making a good faith effort in paying off your debts. 

If a creditor objects to your repayment plan, the reason will be detailed in the documents filed with the court. It is important that you take action immediately because the court could agree with the creditor and your bankruptcy filing could be in jeopardy.

What Can You Do?

If a creditor has objected to your filing, you have to file a written response. In the response, you need to explain why the creditor's claims are untrue and why you are entitled to proceed with the bankruptcy filing. 

Ideally, the judge will review your objection and that of the creditor and make a decision regarding whether or not your filing should be dismissed or the repayment plan modified. However, there is a possibility that you and the creditor will be required to appear in court to argue your sides 

If fighting the objection is not appealing to you, you can opt to make changes to your plan. Before modifying the plan, contact the creditor and discuss what terms would address its objections.

It is important to note that any changes you make to your plan could have an impact on how other creditors view your filing. As a result, you could face even more objections. 

To possibly avoid objections or to learn how to deal with a creditor's objections, work with a Chapter 13 bankruptcy attorney