When Should You Consider an Objection to Confirmation?

 Posted on June 17, 2024 in Debt Collection

As a creditor, you have the right to object to a debtor’s proposed Chapter 13 repayment plan if it fails to protect your interests adequately. Objections to confirmation are important for creditors to ensure fair treatment and maximize recovery during bankruptcy proceedings. However, knowing when to file an objection can be challenging. An Illinois lawyer can help you understand when you should consider an objection to confirmation.

Understated Repayment Amount

One of the most frequent reasons for filing an objection to confirmation is when the proposed repayment amount is understated. This often occurs when the debtor’s plan fails to account for the full extent of their outstanding debt or undervalues the collateral securing the loan. As a creditor, if you believe the repayment amount proposed in the plan is insufficient to cover the balance of your loan, it is vital to file an objection to protect your rights.

Inaccurate Collateral Valuation

Creditors with loans secured by personal property, such as auto lenders, truck lenders, and equipment lenders, should pay close attention to the collateral value stated in the repayment plan. If the plan understates the value of the secured collateral, it can result in a lower monthly payment amount that fails to compensate the creditor adequately. In such cases, filing an objection to confirmation can help ensure the collateral is valued correctly and the creditor receives a fair repayment amount.

Feasibility Concerns

Creditors should also consider objecting to a repayment plan if they have concerns about its feasibility. If the debtor’s income and expenses do not realistically support the proposed monthly payments, there is a higher risk of the debtor defaulting on the plan. By filing an objection, creditors can request a more thorough examination of the debtor’s financial situation and advocate for a plan that is more likely to succeed.

Unfair Treatment of Creditors

In some cases, a debtor’s repayment plan may unfairly prioritize certain creditors over others. For example, the plan might propose to pay a higher percentage of unsecured debt to one creditor while offering a lower percentage to another. If you believe the repayment plan discriminates against you as a creditor or fails to provide equitable treatment, filing an objection to the proposed arrangement can help ensure a more balanced distribution of funds.

Failure to Meet Illinois Legal Requirements

A Chapter 13 repayment plan must comply with Illinois bankruptcy laws and regulations. If a debtor’s proposed plan fails to meet these legal requirements, creditors have grounds to object to confirmation. Some common issues include plans exceeding the maximum allowed duration, failing to pay priority debts in full, or not committing all of the debtor’s disposable income to the repayment process.

If you find yourself in any of these situations, it is helpful to act quickly and file an objection to confirmation before the court approves the repayment plan. Working with an attorney can significantly improve your chances of success and help protect your interests throughout the bankruptcy process.

Contact a Chicago, IL Debt Collection Attorney

If you believe the repayment plan proposed by a debtor under Chapter 13 fails to protect your interests as a creditor, do not hesitate to take action. Contact a Chicago, IL debt collection lawyer who can help you assess the situation and determine whether filing an objection to confirmation is the best course of action. Call Dimand Walinski Law Offices, P.C. at 312-704-0771 for a private consultation.