"Bad Faith" Objection...

[caj0524]

So... I got my first Objection to Plan Confrmation and Objection to Exemptions today.

It is from an auto lender that repossed that car a year ago.

Just before it was repossessed we bought a minivan when we found out we were expecting triplets. Fast forward several months and we needed a second car. We got another car, nothing special, just a $7k loan.

In the objection he argues that we bought a luxury vehicle, hence the $34k loan. In reality, its a base model toyota minivan. We had just bought my wife a different small car when the pregnancy came along. We are about $10k upside-down in the new van. I believe he is just looking at the loan amount.

Now, this lender objects to various (technical) things in my plan and in my schedules that are being amended. Then, they argue that buying the 2 cars before filing, then having a 0% plan to unsecureds is both a bad faith filing and plan.

My confirmation hearing is in 2 weeks. How do I defend a bad faith objection? Bring the babies???

They are asking for the case to be dismissed.

The plan is what I call tight. Every dollar is going to the plan, and we are nowhere near the max allowances in any category. It just is what it is.

Any thoughts or ideas?

Thanks!

[HHM]

Well, you need to respond in some way.

In general, because of issues like this, this is why I do not recommened people doing chapter 13's pro se. No one here can really talk you through how to respond.

Basically, you need to file a response that denies the allegations.

However, this is an odd objection..who is the car lender. Without more info, it seems like an awful lot of trouble for a small lender to go through, I don't really see what their end game is.

[justbroke]

So... I got my first Objection to Plan Confrmation and Objection to Exemptions today.

It is from an auto lender that repossed that car a year ago.

It's almost always the (current) auto creditors or the mortgage creditors. In your case, an unsecured creditor is complaining... WOW.

In the objection he argues that we bought a luxury vehicle, hence the $34k loan. In reality, its a base model toyota minivan. We had just bought my wife a different small car when the pregnancy came along. We are about $10k upside-down in the new van. I believe he is just looking at the loan amount.

So.

Now, this lender objects to various (technical) things in my plan and in my schedules that are being amended. Then, they argue that buying the 2 cars before filing, then having a 0% plan to unsecureds is both a bad faith filing and plan.

Actually, the Code allows all your secured debt to stay in Plan. That's what Congress allows, so they can't question your secured debt, really.

My confirmation hearing is in 2 weeks. How do I defend a bad faith objection? Bring the babies???

You do need to write a response (opposition to objection to confirmation) and serve it on the creditor (based on the address or addresses in the proof of claim) and file with the court with the certificate of service.

You'll have to address all their points in their objection, one by one. Can't tell you exactly how to do that, but it's just a narrative, but short and sweet and to the point. Include any sections of the Bankruptcy Code or underlying State laws that give you the reason for opposing the particular paragraph in their objection.

I'm guessing that the $34K minivan payments (in plan) are less than $489/month. I'm sure the other car is too (spread over 60 months). So, that's not luxury. I could see if the debt service on the minivan was more than $489/month.

Most unsecured creditors who make these types of objections -- which are rare, and I've never read one from an auto creditor -- do so because they don't think you're committing enough DMI... not because of bad faith. Bad faith is a stretch, so I wonder who this auto creditor is?

You can rebut the "two cars" recently "before filing", by just stating that the minivan was purchased on XX/XX/2008 more than a year before filing. Too easy to rebut.

I think you'll be okay, if you file your response (opposition) as soon as possible. I'd make sure they RECEIVE the response 7 days before your confirmation hearing, so I'd be on top of this today/tomorrow and get it out the door.

[caj0524]

Just Broke... you rock. Thanks!

I completed my response, and I'm actually proud of how it looks, what it says, and the "lawyer-ese" language I used throughout.

However, you bring up another question.

We are under the median income, so I only need to do 36 months. My plan is written now at 39 months in order to pay off the cars.

My cheaper car is being paid $198 per month.

The van is scheduled to get $710 per month for the first 16 months, then when my alimony is up in 16 months, the van creditor will get $1,078 per months for months 17 through 39. The Allowable Stardards for 2 cars in Chicago is $1,412. Even when my DMI sees the bump up starting month 17, we're still under the allowable when you combine the debt service on both - $1,276.

Your thoughts on that flying?

By the way, the creditor objecting is a small local bank here in the 'burbs of Chicago - American Eagle Bank.

[justbroke]

The van is scheduled to get $710 per month for the first 16 months, then when my alimony is up in 16 months, the van creditor will get $1,078 per months for months 17 through 39. The Allowable Stardards for 2 cars in Chicago is $1,412. Even when my DMI sees the bump up starting month 17, we're still under the allowable when you combine the debt service on both - $1,276.

This may be the problem area. They may contest that the ownership allowance is only $489/month per vehicle.

FYI, the "ownership allowance" does not "combine" the ownership and operating allowances. The ownership allowance is to pay a loan on the vehicle. So, the combined ownership allowance nationwide is $978/month. Your argument would probably be, that even if you did pay only receive a $489/month ownership allowance for the vehicle, your DMI would still be negative.

Small bank... I call them ankle biters. They make the most noise (especially Credit Unions) and tend to show up at 341 Meetings. LOL