05 Sep Term Objections in Chapter 13 Cases
Following the 341 hearing in your Chapter 13 case, there is a strong likelihood that you will receive an “objection to confirmation” from your Chapter 13 trustee. A confirmation objection does not mean that your case has been dismissed or that it will be dismissed. Instead, confirmation objections set out issues with your case identified by your Chapter 13 trustee.
A “term objection” is one of the most common Chapter 13 objections. Your trustee will file a term objection if the trustee’s calculations show that your case will require more than 60 months (5 years) to pay out. As you may know, the maximum length of a Chapter 13 is five years. A case running longer than 5 years is not permitted by the Bankruptcy Code.
There are several reasons why your case may trigger a term objection:
- claims filed by one or more creditors may have come in higher than expected. This is especially true in the case of automobile loan claims. Frequently, vehicle claims come in several thousand dollars higher than expected – as such, I always estimate high when I put a vehicle claim in a Chapter 13
- tax claims sometimes come in higher than expected, especially if the claim includes interest and penalties
- mortgage arrearage claims often come in higher than expected. Frequently the attorneys representing the mortgage companies add in $750 to $1,500 for foreclosure fees and bankruptcy analysis.
- you may need to create one or more special classes of creditors. In the Northern District of Georgia, we can set up a special class of payment for co-signed debts. If you forgot that mom, dad or brother has co-signer responsibility on that $10,000 credit card balance, and you want to protect the co-debtor, your plan may run over 60 months
If your plan is running more than 60 months, the cure is to increase the payment to fit within 60 months, reduce the percentage to your unsecureds, or to surrender collateral securing a debt. This is where experienced legal counsel comes into play.
Jonathan Ginsberg, Esq.
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