Objection to Confirmation of Plan

[UpsideDownMI]

Well today was the deadline to object to the confirmation of my plan. I just checked Pacer and low and behold I received an objection from Chrysler Financial. Most of the objections seem petty, but I can't fully comment on them yet, as I am still reviewing the objection.

What action should I take to resolve this objection? I plan on contacting their attorney tomorrow to try and resolve this, but was wondering if I should I file a response with the court. My confirmation hearing is on 12/1 and I need to submit an proposed confirmation order by no later than next Monday per local rule.

[justbroke]

Contact their attorney first. You may need to leave a message. Indicate that you are pro se and that you need to speak to the Attorney (not paralegal) representing the case. It may take a day before you get back to them. Make no promises, but ask what their objection is. That's it!

Then do your response (Debtor's Response to ...).

[UpsideDownMI]

So I have read thru the objection, and have concluded that they are somehow under the impression that my vehicle loan is being crammed down. My plan modified the loan per 1322(b)(2) by lowering the payment amoun,t and extending the payments by 4 months. Their objections all address 1325(a)(5), which is related to a cram down. They basically state that they object to their secure claim not being paid in full (which is not true).

[justbroke]

So I have read thru the objection, and have concluded that they are somehow under the impression that my vehicle loan is being crammed down. My plan modified the loan per 1322(b)(2) by lowering the payment amoun,t and extending the payments by 4 months. Their objections all address 1325(a)(5), which is related to a cram down. They basically state that they object to their secure claim not being paid in full (which is not true).

Well, on your Plan, did you put their entire claim amount to the penny on your Plan? The payment amount won't matter. Also, did they complain about their interest rate?

This is why I would call the lender's attorney and ask them what's wrong. Inform them that they are receiving the full claim amount with interest -- it that's what you put on your plan. If this is a so-called 910-vehicle, then they are right to complain if the claim amount on your Plan doesn't match the amount on their filed claim.

[UpsideDownMI]

The plan does propose to pay the entire claim amount to the penny. The interest rate is 0%, as that was rate in the retail installment contract. The car is not a 910 and their claim will be paid in full 10 months after confirmation.

I am going to call their attorney in the morning, but I also plan on filing a response to their objection for my protection.

[justbroke]

Very nice job in keeping it at the 0% contract rate and not touching the "balance" from the claim. You are in the driver's seat on this one. Pun intended.

Yes, still file a Response to their Objection. I would just talk to their attorney first, then get the Response to the court in due course.

[UpsideDownMI]

Here is an update.

I filed a response asking for the court to deny the objection. I have been in contact with the attorney and still can not reach a resolution. They are asking for me to pay interest which comes to a mere $60 in total for the life of the plan (the secured claim is less than $2,500 and is to be paid in 10 months). They claim that since I modified the payment amount and extended the payments by 4 months, the till rate applies. They say that there is a case that ruled that any modification is essentially a cram down. I can't believe that they how chosen to "throw away dollars to pick up pennies", but they are firm and will not budge. Their other issue is that they are being paid pro-rata to my mortgage and that due to post petition arears and the current funding rate, they will not be paid until a few months after confirmation. I am going to submit confirmation order with this objection pending and see what happens.

[justbroke]

So, even though I joked that you're in the Driver's seat, I now see their issue with your Plan. They are probably right since you did modify the terms of the agreement. Had you kept the original Terms, you would have had their interest rate (0%). Since you are paying in the Plan, you probably have to pay them the Till Rate.

It's actually the Till decision that is precedence for this.

See also In re Soards, 344 BR 829, 830 (Bankr. W.D. Ky. 2006). where the Court found that the issue “before the Court is whether the ‘formula approach’ for determining interest rates as set forth in Till . . . applies to a creditor whose claim is treated as fully secured where the contract rate of interest is below prime.” Notice the key phrase "contract rate of interest is below prime".

Courts that have considered this issue hold that Till applies even though the contract rate is less than the prime rate.

I would pay particular attention to the following caselaw!

Daimler Chrysler Services North America LLC v. Taranto, 365 B.R. 85 (B.A.P. 6th Cir. 2007) (Till applies where proposed plan offers to pay claim in full in a shorter time period than originally contemplated under contract);

In re Grunau, 355 B.R. 334, 336-37 (Bankr. M.D. Fla. 2006) ([U]contract rate of 0% irrelevant, plan must pay Till rate[/u);

In re Ross, 355 B.R. 53 (Bankr. W. D. Tenn. 2006) (must pay Till rate, contract rate was 0%);

In re Brill, 350 B.R. 853, 855-56 (Bankr. E. D. Wis. 2006) (must pay Till rate; contract rate of 0% was determined by market factors that no longer apply);

In re Soards, 344 B.R. 829, 832 (Bank. W.D. Ky. 2006) (Till’s prime rate (7.2%) applies even though contract rate is below prime (3.9%));

In re Scruggs, 342 B.R. 571 (Bankr. E.D. Ark. 2006) (plan must pay Till’s prime rate (8%) rather than contract rate (0%));

In re Pryor, 341 B.R. 648, 651-52 (Bankr C.D. Ill. 2006) (plan must pay Till’s prime plus rate rather than contract rate of 4.9%);

In re Yelverton, 2007 WL 1521595 (Bankr. M.D. Ala. May 21, 2007) (Till requires prime rate of 8.25% plus risk adjustment rather than contract rate of 7.2%.).

[UpsideDownMI]

Before I get into my course of action, I want to vent a little. Why in the world, would a secured creditor who is being payed in full, pursue spend countless hours, money, and court costs to pursue $59? Makes absolutely no sense to me. I feel like dragging this matter out as long as possible, to drive this point home. As far as I am aware (still researching), there is not a precedent in my district related to this.

I have argued in my response that till does not apply, as the supreme court ruling addresses a secured claim that is being crammed down, whereas they are being paid in full. The attorney actually agreed with me on this, but countered with Re Taranto. I argued that Re Taranto does not apply, based on the fact the case involves a 910, whereas my case is not a 910.

The biggest sticking Chrysler has is not the interest, its their stance that payments on a modified or crammed claim must begin immediately post confirmation (per supreme court ruling in till case). Due to the post petition mortgage arrrears and my bi-weekly pay checks, this is not possible.

Again, I don't think their is a precedence on this matter in my district, so at this point, I plan on fighting. I am contemplating amending my plan to reinstate the contract terms with payments starting post confirmation once funding is available. This would remove the objections as my district has ruled that secured payments do not need to begin immediately after confirmation. They have also ruled, that in these cases adequate protection is not needed post confirmation.

Who would have thought that I would have more problems with a secured creditor, with a 2.5k claim amount, who is being paid in full within the first year of the plan, than I would with a 2nd mortgage holder who is being stripped to the tune of almost 70k. Nothing suprises me anymore!

[enari]

I hear you, Penny-wise pound foolish, or so it seems...

Other than a speeding ticket, today was my first court experience...so I have no clue, however,

I'm wondering if, when something like this is done, it's working towards that whole protecting their interest and president thing? Like, if they DIDN'T object to you, someone could use that against them later? Or, in my example, being pro se, the creditor was trying to argue something it could use for other cases?

I'm not sure if that is how it works, if a ruling is different from a published opinion or what? But from that perspective the insanity makes a little more sense... Your $60 times everyone else's > $60 amount might then make it worth arguing, but again that's complete speculation on my part. =)

[justbroke]

Before I get into my course of action, I want to vent a little. Why in the world, would a secured creditor who is being payed in full, pursue spend countless hours, money, and court costs to pursue $59? Makes absolutely no sense to me. I feel like dragging this matter out as long as possible, to drive this point home. As far as I am aware (still researching), there is not a precedent in my district related to this.

Aha, but they will probably ask the Judge for fees! Trust me, they may ask to have the fees added to the claim.

I have argued in my response that till does not apply, as the supreme court ruling addresses a secured claim that is being crammed down, whereas they are being paid in full. The attorney actually agreed with me on this, but countered with Re Taranto. I argued that Re Taranto does not apply, based on the fact the case involves a 910, whereas my case is not a 910.

You car is not a 910-Vehicle? Is this because you refinanced it, or the loan is that mature (> 910 days)?

The biggest sticking Chrysler has is not the interest, its their stance that payments on a modified or crammed claim must begin immediately post confirmation (per supreme court ruling in till case). Due to the post petition mortgage arrrears and my bi-weekly pay checks, this is not possible.

Sounds like just an adequate protection issue.

Again, I don't think their is a precedence on this matter in my district, so at this point, I plan on fighting. I am contemplating amending my plan to reinstate the contract terms with payments starting post confirmation once funding is available. This would remove the objections as my district has ruled that secured payments do not need to begin immediately after confirmation. They have also ruled, that in these cases adequate protection is not needed post confirmation.

Actually, if it's crammed down and you're paying it over teh court of the plan period, I think you can even do pro-rata. I actually paid my vehicle loans in my plan in a stepped payment arrangement, to cure post-petition arrearages on my home (due to me first surrendering, then withdrawing my surrender of my primary residence, and moving back in, post-petition).

Who would have thought that I would have more problems with a secured creditor, with a 2.5k claim amount, who is being paid in full within the first year of the plan, than I would with a 2nd mortgage holder who is being stripped to the tune of almost 70k. Nothing suprises me anymore!

I have posted this several times so far. Automobile Lender are the piranha of the Bankruptcy Process. They are the only ones that kick and scream like a child!

[UpsideDownMI]

Aha, but they will probably ask the Judge for fees! Trust me, they may ask to have the fees added to the claim.

Possible. I would think that my claims would have to be completely off base for the judge to grant fees.

You car is not a 910-Vehicle? Is this because you refinanced it, or the loan is that mature (> 910 days)?

Not a 910. Loan is that mature. 6 regular payments remained when I filed. I included the payment in my plan so that I could accurately show that I can support a 13. My DMI wouldn't allow me to pay outside the plan.

Sounds like just an adequate protection issue.

Yes it is. Their objection is that payments on a cram down must begin immediately after confirmation for adequate protection. Again, my stance is that this is not a cram down. I reduced the monthly payment and added 4 months to the payment schedule.

Actually, if it's crammed down and you're paying it over teh court of the plan period, I think you can even do pro-rata. I actually paid my vehicle loans in my plan in a stepped payment arrangement, to cure post-petition arrearages on my home (due to me first surrendering, then withdrawing my surrender of my primary residence, and moving back in, post-petition).

I used the model plan in my district, which pays claims pro-rata. Chrylser claims that if it is the plan pays pro-rata on a modified or crammed claim, they must receive a payment in the first disbursement after confirmation. That is my real problem. It is not possible to pay a class 5 claim, when I have to pay trustee fees and post petition arrears before they got paid.

I have posted this several times so far. Automobile Lender are the piranha of the Bankruptcy Process. They are the only ones that kick and scream like a child!

I 2nd that!

Like I said before, I think if I amend my plan to bring back the original terms of the car loan, the pro-rata objection is not valid even if they don't get paid immediately after confirmation.

Also, I filed a response to their objection with the court and I am strongly considering filing a motion to dismiss their objection on the grounds that it is erroneous. The only thing in the objection that states that the creditors rights have been modified is their claim that they are not being paid their full secured claim, which they have verbally admitted is incorrect. The objection does not mention anything about the payment amount being lowered, or how their rights are being affected other than in relation to the false statement that they are not being fully paid. To me that is erroneous.

[justbroke]

Make me proud... go litigate!

[UpsideDownMI]

Another Update.

The objection will be heard next week at my confirmation hearing. I plan on fighting the objection as previously discuss, however I have proposed a resolution, which the attorney for Chrysler Financial has declined. The resolution proposes to remove my treatment of the secured claim as modified, and reinstate the original monthly payment amount. The attorney declined based on the grounds that Chrysler Financial still will not receive payment until (5) months after confirmation due to the post petition mortgage arrears. I have cited the following cases in defense of my proposed resolution. In re Dews, 191 B.R. 86 (Bankr. E.D. Va. 1995) and In re Walters, 203 B.R. 122 (Bankr. C.D. Ill.1996). These cases have been confirmed against creditor objections allowing secured payments to begin months after confirmation, when funding is available to support commencing distributions to the creditor. Since that is the main grounds of the objection, I believe my resolution puts me in the drivers seat.

I can't wait to see how this goes at my hearing next week!

[justbroke]

Awesome!