When the Bankruptcy Trustee Might Object to Your Chapter 13 Plan
Learn about the most common reasons that cause trustees to object to Chapter 13 bankruptcy repayment plans.
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When you file for Chapter 13 bankruptcy, you propose a plan to pay off some or all of your debts. Once you file your repayment plan with the court, the Chapter 13 bankruptcy trustee will review your plan to make sure it satisfies all requirements under the law. If the trustee believes that the court should not confirm (approve) your plan, he or she will object to it.
For more information on how to propose a successful Chapter 13 plan, see our topic area on The Chapter 13 Repayment Plan.
Reasons the Bankruptcy Trustee Might Object to Your Chapter 13 Repayment Plan
When you propose a Chapter 13 repayment plan, you have to follow certain rules. The following are some of the most common reasons the trustee might object to your repayment plan.
You Didn’t Contribute All of Your Disposable Income Into Your Plan
One of the requirements of Chapter 13 bankruptcy is that you contribute all of your disposable income into your repayment plan. In general, the amount of your disposable income depends on whether your income is above or below the median income in your state for a same size household and your necessary living expenses. If the bankruptcy trustee believes that you have additional disposable income you should be paying into your plan, he or she will object to your plan and ask the court to increase your monthly plan payment.
To learn more about how your disposable income might affect your repayment plan, see Your Disposable Income and Its Effect on Your Plan Payment Amount.
Your Plan Doesn’t Pay Off Certain Required Debts
There are certain debts you must pay off in full through your Chapter 13 plan. These debts include:
- priority obligations (such as alimony, child support, and certain taxes), and
- arrearages on secured debts (such as your mortgage or car loan) encumbering property you want to keep.
If you have debts that must be paid off in your Chapter 13 plan, the trustee will object if your proposed plan doesn’t include them.
For more information on what types of debts must be paid off in Chapter 13 bankruptcy, see Debts You Must Pay in Chapter 13 Bankruptcy.
Your Plan Is Longer Than Five Years
In general, the length of your repayment plan depends on your income. If your income falls below your state’s median, you can propose a plan that will last only three years. But if your income exceeds the state median, you typically must be in a five-year repayment plan. In either case, your plan can’t go above five years in length. If your monthly payment is not enough to pay off all of the debts included in your plan within five years, the trustee will object to your plan.
To learn more about how long your Chapter 13 repayment plan must be, see How Long Will My Chapter 13 Bankruptcy Plan Last?
You Can’t Afford Your Plan Payment
The bankruptcy court will only confirm a plan if it believes that you can afford to make your plan payments each month. If the trustee thinks that your income is not sufficient for you to make your monthly plan payment, he or she will argue that your plan is not feasible and should not be confirmed.
What Happens If the Trustee Objects to Your Plan?
If the trustee files an objection to confirmation of your plan, you will need to respond to the trustee’s objection. In most cases, you can fix your plan errors or negotiate with the trustee to resolve his or her objections prior to your Chapter 13 bankruptcy confirmation hearing. But if you can’t reach an agreement before the hearing, you will have to explain to the court why your plan should be confirmed.