Matteson Bankruptcy Attorney Talks About Creditors Approval Of Plan

Per Matteson bankruptcy attorney, all creditors do not have to approve a Chapter 13 plan for a plan to be confirmed by the court.  Typically the trustee is going to be the one who recommends whether or not your plan is going to be confirmed by the court.  Creditors do have an opportunity to file proofs of claim and creditors have an opportunity to object to a claim or to a confirmation of your case in certain circumstances.  However, it is not the creditors who decide whether or not your plan is going to be confirmed per se. 

Now in the case of mortgage arrearages, we want to make sure, as debtor’s attorney, that we are paying back all of the mortgage arrearages to the penny over the life of the case.  Additionally, we want to make sure that the vehicle, if there is vehicle debt being paid back, adequate protection payments and at the right interest rate.  

However, as far as unsecured creditors go, we actually hope the unsecured creditors do not file a proof of claim.  If creditors do not file a proof of claim and the debtor makes all of the required payments under the payment plan, then those creditors’ debts will be a limited in full.  Thus, it’s one of those situations where creditors either need to file proofs of claim or the debt could be possibly eliminated 100% if they fail to do so. 

 So typically the debtor’s attorney is going to prepare a plan.  The debtor is going to start making payments.  The creditors are going to file their proofs of claim.  Provided the debtor is treating the creditors properly under the Bankruptcy Code and provided the debtor is complying with all of the other requirements under the bankruptcy code, then the trustee will likely recommend that case for confirmation and the creditors will be treated according to the Bankruptcy Code and a hierarchy that is provided for in the model plan. 

The amount that the debtor is going to pay per month is going to be based on income, expenses, assets and liabilities.  The trustee is going to make sure, on behalf of all the creditors, that the debtor is paying back all of his required disposable income over the life of the Chapter 13 plan.  A creditor does have the ability to object to the plan but that is typically based on the amount or the way that they are being treated, not necessarily on whether or not the debtor is providing all of their disposable income towards the plan.  The trustee takes over on that element and will recommend or deny confirmation to the judge when it comes time for a Chapter 13 confirmation hearing.