July 12, 2020

Should I be Concerned if I Receive an “Objection to Confirmation?”

What is an “objection to confirmation” in a Chapter 13 case and should you be concerned about it?  As you know, a Chapter 13 bankruptcy functions as a court sanctioned repayment plan.  Under the law, you – the debtor – must propose this repayment plan to the court.

Clark and Washington’s job is to evaluate your financial circumstances and to prepare this repayment plan.  As your attorneys, we have both a desire and an obligation to represent you zealously.  We know that five years (the typical term of a Chapter 13 plan) is a very long time and we also know that you will face unexpected emergencies and cash crises during your plan.

Your creditors and Chapter 13 trustee are not particularly concerned about what might happen over the next five years.  They want every dime of “disposable” income and will push for the highest possible Chapter 13 plan payment.

The Chapter 13 plan we prepare in your case, therefore, will satisfy the requirements of the Bankruptcy Code, but it will also reflect what we consider a realistic approach to the next five years.  Not surprisingly, your Chapter 13 trustee may not agree with our assessment of what constitutes your “best efforts” and the trustee or creditors may file a document called an “objection to confirmation.”

By law, you must be served by mail with this objection to confirmation.   Objections to confirmation are filed in 98% of the Chapter 13 cases filed in Tennessee bankruptcy courts.  Every week we get frantic calls from clients who have received an objection and are certain that their case has been dismissed.  This is NOT the case.

An objection to confirmation does not mean that your case has been dismissed.

Instead, an objection to confirmation means that the trustee or creditor wants a change in your plan.  Most likely they will want more money from you each month.  Usually, we can negotiate a compromise to satisfy the objection and get your case approved or “confirmed” by the judge.  Sometimes we have to argue the objections – click to read a recent blog post about one of Clark and Washington’s successes in defeating an objection to confirmation.

Look at objections to confirmation as a normal part of the Chapter 13 process.  As your attorneys, we will be with you every step of the way and we will advise you regarding the best way to deal with objections to confirmation.

Clark and Washington Attorney Wins Confimation Hearing Over Trustee Objection

May a debtor include payments due secured creditors (house payment and car payment) for Chapter 13 means test calculation purposes if the debtor’s plan provides for the surrender of the collateral?  Attorney Mary Beth Ausbrooks, managing attorney of Clark and Washington’s Nashville office recently argued this issue before Judge Marian Harrison in Nashville (Middle District of Tennessee) bankruptcy court.

Opposing Mary Beth was the Nashville Chapter 13 trustee, Henry Hildebrand.  The trustee argued that if the debtor was planning on surrendering her house and her car, she could not deduct the monthly payments for these items when calculating the means test.  Without these deductions, the debtor would show over $1,000 more in “disposable income” which would result in a much higher Chapter 13 payment.

In a brief published decision, Judge Harrison sided with the debtor and Clark and Washington.  The judge focused on the language of Section 1325 of the Bankruptcy Code which looks to payments contractually due in the 60 months following the filing of the case.  The statute does not provide that surrendered items result in the disallowance of the deduction so the trustee cannot demand as much.   Click here to read Judge Harrison’s decision in the case of Brenda Sue Ray.