Cite as: Keith M. Lundin, Lundin On Chapter 13, § 114.7, at ¶ ____, LundinOnChapter13.com (last visited __________).
A creditor opposed to a preconfirmation modification of the plan should file a written objection to the modified plan and, if there has been a prior written acceptance of the plan, file a written rejection of the modified plan.1 Time may be of the essence: it has been held that a deadline for filing objections to confirmation is not extended or restarted when a preconfirmation modification is filed that does not change the treatment of the objecting creditor.2
In most jurisdictions, an objection to preconfirmation modification of a Chapter 13 plan will not be set for a separate hearing but will be addressed at the hearing on confirmation of the (now modified) plan. In jurisdictions that delay the hearing on confirmation,3 some courts schedule a separate hearing on preconfirmation plan modifications.
The propriety of a preconfirmation plan modification is measured against a different standard than that used for modification after confirmation. Section 1323(a) prohibits modification of a plan before confirmation if the modified plan “fails to meet the requirement of section 1322 of this title.”4 In contrast, at modification after confirmation “sections 1322(a), 1322(b) and 1323(c) of this title and the requirements of section 1325(a) of this title apply.”5 In a jurisdiction that schedules a hearing on modification of the plan before confirmation that is separate from the confirmation hearing itself, only the mandatory and permissive contents of the plan specified in § 1322 are applicable. A creditor opposing a preconfirmation modification should specify which provision of § 1322 is violated by the proposed modification.
Reported decisions suggest that courts consider objections to modification of Chapter 13 plans before confirmation based on provisions of the Code other than § 1322. For example, in Williams v. Tower Loan of Mississippi, Inc. (In re Williams),6 prior to confirmation, the debtor proposed to modify the plan to surrender part of the collateral for an undersecured claim while paying the balance as a secured claim. The Fifth Circuit concluded that § 1325(a)(5)(C) permits a Chapter 13 debtor to retain all of the property that secures a claim and pay the entire secured claim through the plan or else the debtor must surrender all of the property securing the claim; the debtor cannot surrender part of the collateral and pay for part through the plan. The court denied the debtors’ proposed preconfirmation modification based on § 1325(a)(5)(C). The Fifth Circuit does not explain why it applied § 1325 to a preconfirmation modification under § 1323. Williams certainly suggests that creditors should assert objections to preconfirmation modifications based on sections other than § 1322. It is not clear from Williams whether the failure to object to a preconfirmation modification based, for example, on § 1325(a)(5) could be asserted by the debtor at confirmation as an estoppel or waiver of the objection.
The trustee is obligated under § 1302(b)(2)(B) to appear and be heard at any hearing on modification after confirmation.7 Trustees routinely appear with respect to preconfirmation modifications under § 1323, and there are no reported decisions doubting the trustee’s standing to participate at modification before confirmation.
1 See § 214.1 [ Effect of Preconfirmation Modification on Prior Acceptance or Rejection of the Plan ] § 114.6 Effect of Preconfirmation Modification on Prior Acceptance or Rejection of the Plan.
2 See In re Duncan, 245 B.R. 538, 543 (Bankr. E.D. Tenn. 2000) (Creditor that failed to timely object to confirmation of the original plan cannot object to a modified plan when the portion of the plan to which the creditor’s untimely objection relates was not modified. Original plan treated Household Automotive Finance Corporation as a partially secured creditor. Notice of the meeting of creditors warned Household that a local bankruptcy rule required objections to confirmation to be filed prior to the conclusion of the meeting of creditors. Household did not timely object. After the meeting of creditors but before confirmation, the debtor modified the plan to change the treatment of unsecured creditors, but the modified plan did not change the treatment of Household’s secured claim. “If Household’s objection to the debtor’s plan pertained to the provisions of the plan which had been altered by the modification, its objection would be timely. . . . However, Household’s objection pertained solely to the treatment under the plan of its secured claim, which treatment did not change in the modification. . . . Because Household’s objection was not filed prior to the conclusion of the meeting of creditors . . . and because the debtors’ plan modification did not change Household’s secured treatment, Household’s objection will be overruled.”).
3 See § 216.1 [ Timing of Hearing on Confirmation ] § 115.1 Timing of Hearing on Confirmation before BAPCPA.
4 11 U.S.C. § 1323(a).
5 11 U.S.C. § 1329(b)(1). See discussion beginning at § 126.1 Standing, Timing and Procedure.
6 168 F.3d 845 (5th Cir. 1999).
7 See § 58.7 [ Appear and Be Heard with Respect to Modification of Plans after Confirmation ] § 53.8 Appear and Be Heard with Respect to Modification of Plans after Confirmation.