Objection to modified plan - Mazda Credit

[flyspeck]

In an active BK13 since January 2010. Filed for a modification August 15 due to my wife's job termination, and a new job with substantial decrease in income.

Monthly decrease amounts to literally $2.00 above the amount of plan payment going toward one of the two cars in our 13. Our intent is to surrender one of the vehicles (a Mazda - one that was several thousand "upside down" going into the BK), and make do with one car for however long.

However, in the mail today was an objection filed by Mazda's atty, saying:
"...it does not comply with the provisions of 11 USC — §§1322 and 1325.

In particular, but not by way of limitation, Mazda objects to the Debtors' modified plan to the extent that it provides for the Debtors' surrender of one 2007 Mazda 3 in satisfaction of the debt. Mazda is entitled to have any unsecured deficiency claim treated in the same manner as other unsecured claims."

Of course, we get the mail after our atty's office closes for the day. Until I touch base with her, I'd like to post this in order to - I hope - calm the jitters.

It really doesn't make sense that Mazda would waste a lot of time and effort objecting when the alternative would be to have whatever deficiency lumped into the unsecured pile, of which we're paying maybe a penny (if that much) on the dollar. We squeaked through the 7 means test but chose to go 13 to hedge against any future surprises, such as - ohhhh - my wife's job being outsourced. :-O

Again, the amount of income drop is virtually equal to the plan payment after surrender of the Mazda. What would they gain out of this?? They're getting the car, whether they like it or not.

In re-reading, it comes across like a lot of bluster on the part of Mazda (and they got their knickers in a knot over the initial filing, *****ing about the interest rate they were having to accept). But I just want to put this in front of everyone, to get a reply of (I hope) "don't worry, it's a lot of nothing", or (heaven forbid) that I do have something to worry about.

Thanks!

R.

[forgotten]

They just want to be able to claim the deficiency balance as a unsecured debt. You may not be paying much now, but what if you get a substantial increase in salary, win the lottery, or other windfall? They want to be able to put their hand in the honeypot as well.

Edit: worth it? probably not. Maybe they are not really busy?

[justbroke]

Secured creditors need to be careful in Chapter 13s. Some have been stuck... holding the bag so to speak. If they file a secured claim and the claims bar date passed, they can't amend it to an unsecured claims. Smart creditors, in Chapter 13s, will have a secured and unsecured component. Some will put all but $1 as secured. This way, they can file an amended claim later -- even after the claims bar date.

This isn't the case in all Districts, but many are clear on what the affect of changing a claim from secured to unsecured does. Many treat the filing of the unsecured claim as a "new" claim, and you can't do that after the claim bar date unless the debtor agrees... and that won't happen.

Also, some argue that you can't surrender a secured item in "full satisfaction" of the claim since they "may" be entitled to a deficiency claim in the bankruptcy.

I will repeat it here that automobile creditors are the WORST in Chapter 13s! They are always the ones who complain the most.

[flyspeck]

Thanks for your input. What both of you mention makes sense. I haven't yet checked to see if Mazda hedged on both sides in their original claim ... but I could see where they want a chance at some money should we strike a windfall.

Just checked PACER -- the Trustee filed a motion to confirm the modification the very same day that Mazda filed their objection. Two days later, Trustee withdraws confirmation on account of the object, as a hearing will be required ... on October 12! So I guess we're going to have to skimp along another month or more on the previous (higher) plan payments. Nice.

R.