Creditor objections

[Kingxray]

Hi all,

We filed for BK7 after my father sued us and tried to garnish my husband's wages and put a lien on our house (that we were selling). My father's lawyer filed a "notice of appearance" and showed up for our 341. After several attempts we were unsuccessful in a Chapter 7 and decided to convert to Chapter 13. Again, my father's lawyer filed a "notice of appearance" but did not show up for the 341. He did, however, file a "proof of claim".

We listed my dad as a secured claim on our payment plan (due to lien he had on our house and by his lawyer's own admission in our Chapter 7 case). The trustee agreed to having us pay 100% of our debt and 0 dollars to my dad, as we surrendered the house he had the lien on.

Here are my questions:

Did my dad file a proof of claim to try to make himself unsecured because he didn't get any money out of our house? Can he do this?

I am assuming he will file an objection to confirmation of the plan. Do the same rules apply in Chapter 13 as they do in a Chapter 7? I read the sticky above regarding creditor objections.

Thanks for your time.

[despritfreya]

Your father has a judgment AND a judgment lien. The claim he filed may or may not assert a secured status, secured by the recording of the judgment. If the claim was filed as "secured" I see no problem with him amending it to reflect an unsecured status especially if there is not enough equity in the property to pay the judgment.

I think your bigger problem is going to be him filing an Objection to the Plan AND a Complaint objecting to your discharge under 1328(a)(2). Since this is your father I must assume there is some very, very bad blood between you and he will do whatever he can to impair your ability to obtain a discharge. If course, if the reason you flipped the case from the 7 to the 13 was to eliminate a claim he was asserting under 523(a)(6) - willful and malicious injury - you may have a shot since (a)(6) is specifically left out of 1328(a)(2) BUT see 1328(a)(4) which applies if there was a "personal injury".

Des.

[Kingxray]

We flipped from 7 to 13 because the trustee filed a motion to dismiss our case. The money owed to my dad was borrowed 10 years ago and we had paid 75% of it back with the hopes of selling our house and giving him the equity that was left in it. He was impatient and real estate market soured and he sued (in another state), so we were unable to get to the court to fight it. There was no "personal injury" or malicious intent. Other than that, what other grounds can he object to? Also where can I look up these rules, 1328, 523, etc. Is there a website? Thanx much.

[daylate]

Here is a link to 1328 http://www.law.cornell.edu/uscode/us...---000-.html-I found it by Googling US Bankruptcy Code 1328-I 'm pretty sure if you do hte other sections you'll get them. Lots of legalese here so good luck.

[despritfreya]

This sounds better. Your conversion was based upon 707 presumption of abuse or substantial abuse issues - you make too much $$ to do a 7. The suit from dad was simply a breach of contract action.

If dad filed an unsecured claim, unless you object to it and your objection is sustained, the Trustee will pay him out of whatever you pay into the Plan just like all other unsecured creditors over the next 5 years. The reality is that unless there is some reason that you must pay 100% of all claims (hanging onto non exempt assets for example), your Chapter 13 Plan pays what you can afford to pay over the 5 years. If that ends up at 100% so be it. But it could just as easily end up at some lesser amount. So, unless you are trying to knock out claims so you can get out of bk early there is no reason to fight dad since, regardless of how many claims there are you either pay 100% or what you can afford to pay within 60 months, whichever is less. Did that make sense?

Next questions:

How much are we talking about?
Is your attorney going to file an objection to the claim?

Des.

[Kingxray]

This sounds better. Your conversion was based upon 707 presumption of abuse or substantial abuse issues - you make too much $$ to do a 7. The suit from dad was simply a breach of contract action.

If dad filed an unsecured claim, unless you object to it and your objection is sustained, the Trustee will pay him out of whatever you pay into the Plan just like all other unsecured creditors over the next 5 years. The reality is that unless there is some reason that you must pay 100% of all claims (hanging onto non exempt assets for example), your Chapter 13 Plan pays what you can afford to pay over the 5 years. If that ends up at 100% so be it. But it could just as easily end up at some lesser amount. So, unless you are trying to knock out claims so you can get out of bk early there is no reason to fight dad since, regardless of how many claims there are you either pay 100% or what you can afford to pay within 60 months, whichever is less. Did that make sense?

Next questions:

How much are we talking about?
Is your attorney going to file an objection to the claim?

Des.

Thanks Des. Yes we converted to 13 because of 707. We filed our payment plan with my dad listed as secured (because of the lien on the house and by his lawyer's own admission during our chapter 7). The B22 showed we had enough disposable income to pay our remaining debts at 100% with $200/mo. to spare. So the payment plan has us paying our unsecured debts at 100% and my dad nothing, as we surrendered the house. We filed our plan last week and the trustee has not mentioned my dad's proof of claim or objected to our plan, as of yet. My concern is that he will object to confirmation of the plan because he is not getting paid in the plan. We have not filed an objection to claim; we are waiting to see what he does. My dad wants 110K (mostly interest he added since our dispute). We are paying 66K unsecured at 100%

[despritfreya]

The B22 showed we had enough disposable income to pay. . . $200/mo.

But that only equals $12,000.00 therefore your Schedule I&J paints a different picture if you are paying $66,000.00 to unsecured creditors. What is your actual Plan payment?

Having asked the above, if dad does not file an objection to the Plan then my recommendation is to leave it alone. You are committed to pay your disposable income into the Plan, not payment in full of all claims. So, instead of paying 100%, with dad’s unsecured claim in the mix, your creditors will split the pie with dad getting the largest percentage since he holds the largest claim.

Assuming your attorney will charge more to fight dad if he objects, a good way to get dad to go away is to remind him that for every dollar in added legal fees you have to pay such is one dollar that will be taken away from the unsecured creditors since overall funding in the Plan (unless you have under-reported your disposable income) will not change. So, if he wants to fight that is just great since payment of the added fees is coming out of his pocket, not yours.

Basically you have a pie that you are paying in. Out of that pie you are paying administrative fees which includes legal fees, taxes if you owe any, secured creditors if you have any and unsecured creditors. If the cost of administering the case goes up (increase legal fees), then payment to unsecured creditors goes down since the distribution of the pie changes. I have used this tactic many times and it always works especially if the only reason unsecured creditors are getting $$ is that my client’s budget says he/she can afford to pay it.

Des.

[AngelinaCatHub]

Wow, Dad must be a hellofaguy. It has been my experience in seeing and experiencing that APs are usually brought about by personal friends (ex) family, or others with the intent to damage the bk, in spite and not so much as getting their money back. I would expect that next step to happen from sensing Dad's vindictive nature from this thread. What say you Des? 'Hub

[Kingxray]

Thanks again. I'll keep ya posted. Hopefully I'll see something tomorrow on Pacer recommending confirmation (crossed fingers).