§ 116.1     Standing to Object
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 116.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Section 1324 provides that a “party in interest” may object to confirmation of the Chapter 13 plan.1 Party in interest is not defined for Chapter 13 purposes.

[2]

Creditors are obvious candidates for standing to object to confirmation. The reported decisions demonstrate that creditors are not automatically parties in interest for purposes of § 1324. For example, it has been held that an unsecured claim holder that has failed to file a proof of claim is not a party in interest and lacks standing to object to confirmation.2 The logic of these decisions is that a creditor without an allowed claim “does not have the requisite pecuniary interest to be a ‘party in interest’” with respect to confirmation of a plan.3 The obvious remedy is for the creditor to file a proof of claim before or with a written objection to confirmation. In a district that schedules confirmation hearings prior to the deadline for filing proofs of claim,4 it has been held that the filing or the allowance of a proof of claim is not a predicate to standing to object to confirmation, at least with respect to grounds other than the disposable income test in § 1325(b)(1).5

[3]

If the period for filing proofs of claim has expired under Bankruptcy Rule 3002,6 the creditor that failed to file a claim may be barred from objecting to confirmation. Many courts have held that the failure to timely file a claim prohibits the creditor from participating in distributions under the plan.7 Participation in distributions is the only “pecuniary interest” for most unsecured creditors in Chapter 13 cases. Forfeiture of standing to object to confirmation is the logical consequence of failure to timely file a proof of claim.

[4]

In contrast, when the plan specifically provided for payment of late-filed claims, one bankruptcy court found exception to the general rule barring objections to confirmation by an untimely filed, unsecured claim holder.8 Another court held that a wholly unsecured mortgage holder had standing to object to confirmation of a plan that would strip off its lien notwithstanding that the court sustained an objection to the lienholder’s untimely filed proof of claim.9 This court reasoned that lien stripping gave the mortgage holder a pecuniary interest in confirmation notwithstanding that it could not receive distributions under a confirmed plan.

[5]

An unsecured “creditor” discharged in a prior Chapter 7 case would seem to lack standing to object to confirmation in a subsequent Chapter 13 case; however, one court held that creditors discharged in a prior Chapter 7 case are entitled to notice of a subsequent Chapter 13 filing and to an opportunity to object to confirmation.10 Such notice is not required by the Bankruptcy Rules, and it is not clear what entitlement might be claimed by a discharged creditor in the subsequent Chapter 13 case. On unusual facts, the Bankruptcy Appellate Panel for the Tenth Circuit held that a Chapter 7 trustee has standing to object to confirmation when the debtor filed a separate Chapter 13 case after discharge but before resolution of the Chapter 7 trustee’s adversary proceeding to recover real property and to revoke the debtor’s Chapter 7 discharge.11 When the Chapter 7 trustee was awarded compensation and the debtor then converted to Chapter 13, the Chapter 7 trustee was a party in interest with standing to object to confirmation in the Chapter 13 case.12

[6]

Not all creditors have standing to raise all objections. For example, only the trustee and the holders of allowed unsecured claims have standing to object to confirmation on the basis of the disposable income test in 11 U.S.C. § 1325(b).13 An unsecured creditor without an allowed claim lacks standing to invoke the disposable income test in § 1325(b). An oversecured claim holder lacks standing to object to confirmation on disposable-income-test grounds because an oversecured claim holder does not also have an allowed unsecured claim.14 In contrast, an allowed unsecured claim holder has standing to object to confirmation of a plan that fails to strip off a wholly unsecured mortgage when lien stripping would liberate income to pay unsecured claims through the disposable income test.15

[7]

The Chapter 13 trustee has standing to object to confirmation: the Code directs the trustee to appear and be heard at any hearing concerning confirmation of a plan.16 As stated by the U.S. Court of Appeals for the Ninth Circuit:

        The Chapter 13 trustee has standing to object to a plan that does not meet the requirements for confirmation. . . . The plain language of § 1302(b)(2) confers standing to object to confirmation of a plan because § 1302(b)(2) requires a trustee to “appear and be heard at any hearing” that concerns the “confirmation of a plan.” . . . [A] Chapter 13 trustee has standing to object to plan confirmation under 11 U.S.C. § 1325(a)(1).17
[8]

The conclusion that a Chapter 13 trustee can raise any creditor’s objections to confirmation is reassuring to some and frightening to others. The possibilities are borne out in a few reported cases. For example, in In re Fox,18 the proposed plan contained language finding an undue hardship for purposes of discharging student loans under § 523(a)(8).19 The debtor listed three student loan creditors. One student loan creditor objected to confirmation, the other two did not. The Chapter 13 trustee joined the one objecting student loan creditor’s objection to confirmation. The bankruptcy court held that the Chapter 13 trustee “has standing to dispute the provisions of the proposed plan on behalf of any other student loan lender,” and the failure of the two student loan creditors to object “does not render the proposed plan automatically confirmable as to them.”20

[9]

In In re Liles,21 the plan accelerated payment of a secured debt at the expense of unsecured claim holders. No creditor objected to confirmation, but the Chapter 13 trustee did. The bankruptcy court concluded that the Chapter 13 trustee had standing, giving this account: “[T]he Chapter 13 Trustee, as representative of the estate is charged with representing the interests of the unsecured creditors . . . . [T]he Trustee’s purpose is to prevent inequitable distribution of assets among classes of creditors.”22

[10]

However, the Chapter 13 trustee does not represent all the interests of all creditors.23 Creditors cannot expect the Chapter 13 trustee to ferret out all objections to confirmation and timely raise those objections on behalf of creditors. As the U.S. Court of Appeals for the Third Circuit explained, although the Chapter 13 trustee has an obligation to determine whether the plan complies with the confirmation requirements, “[t]he affirmative obligation to object to the [debtors’] plan rest[s] with [the creditor] not with the bankruptcy court or the trustee.”24

[11]

The 1984 amendments to the Bankruptcy Code may have (inadvertently) suggested a limitation on standing to object to confirmation. When Congress added the disposable income test to § 1325(b) of the Code, it specified that only allowed unsecured claim holders and the Chapter 13 trustee have standing to object to confirmation on the ground that the plan fails to commit all the debtor’s projected disposable income.25 One court has held that the explicit grant of standing to the Chapter 13 trustee in § 1325(b) signals congressional intent that the trustee lacks standing to object to confirmation on other grounds.26 This interpretation of § 1325(b) collides with the trustee’s statutory responsibility to “appear and be heard at any hearing that concerns confirmation of a plan.”27 The same negative inference would leave the trustee without standing to object to confirmation on any ground in § 1325(a). This extreme position gathers some support from cases holding that the bankruptcy court is without sua sponte authority to object to confirmation under § 1325(b) because of the explicit statutory grant of standing in that section to the trustee and to the holder of an allowed unsecured claim.28 Section 1325(b) has also been interpreted to preclude the U.S. trustee from standing to object to confirmation for noncompliance with the disposable income test.29

[12]

When the executor of an estate filed an objection to confirmation of a Chapter 13 plan, one bankruptcy court looked to state law and found standing based on the executor’s capacity to maintain a lawsuit or raise claims on behalf of the decedent.30 In In re Morgan,31 the bankruptcy court held that a corporate servicing agent for a mortgage holder had no standing to object to confirmation of a Chapter 13 plan and engaged in the unauthorized practice of law by doing so.

[13]

Many courts have held that the bankruptcy judge has a responsibility to determine whether the confirmation requirements of §§ 1322 and 1325 are satisfied notwithstanding the absence of an objection to confirmation by a creditor or the trustee.32 For the most part, these courts do not claim that bankruptcy judges are parties in interest for purposes of § 1324; typically, the only authority cited is an “inherent,” or “independent” duty to ensure compliance with the Code, not derivative of any particular section.

[14]

There are good statutory and policy reasons why bankruptcy judges are not parties in interest with standing to object to confirmation. When Congress intended the bankruptcy court to raise issues as a party in interest, the Code says so in plain language. For example, 11 U.S.C. § 707(b) provides, “The court, on its own motion . . . may dismiss a [Chapter 7] case . . . if it finds that the granting of relief would be a substantial abuse of the provisions of [Chapter 7].” When a debtor is not represented by an attorney in the negotiation of a reaffirmation agreement, § 524(d) mandates that “the court shall— . . . inform the debtor” of certain rights and convene a hearing to “determine whether the agreement” complies with listed statutory requirements.33

[15]

Several courts have recognized that when the Bankruptcy Code confers standing on named parties to raise certain objections to confirmation, the bankruptcy judge is prohibited from raising those issues. For example, it has been held that the bankruptcy judge is without standing to object to confirmation under the disposable income test in § 1325(b)34 because the section only authorizes an objection by the trustee or the holder of an allowed unsecured claim.35 Perversely, while admitting that bankruptcy judges are without standing to object to confirmation under the disposable income test, some courts distort other tests for confirmation to reach the same issues without an objection to confirmation from a qualifying party in interest.36

[16]

11 U.S.C. § 105 states that “no provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.” If the content of the plan and the deadline for filing objections have been properly noticed as required by Bankruptcy Rule 2002, and if no one files an objection to confirmation, § 105(a) is not implicated. That a creditor failed to assert even an obvious objection to confirmation threatens no court order or rule. It may be foolish, it may be malpractice (if the creditor was represented by counsel), it may be negligence or laziness, but it is not abusive of any process. It is not the bankruptcy judge’s responsibility to ensure that all available objections to confirmation are fully prosecuted.

[17]

It is fundamentally a bad idea for bankruptcy judges to object to confirmation of Chapter 13 plans. It is a distortion of the judicial role for the judge to assume the mantle of an advocate opposing confirmation of a plan. With whom does the debtor litigate? How does the bankruptcy judge comply with the notice requirements for objections to confirmation in Bankruptcy Rule 3015(f)? If the court sustains its own objection to confirmation, who responds to the debtor’s appeal?

[18]

The continuing stream of reported decisions cited above is fair warning that many bankruptcy judges police the confirmation of uncontested Chapter 13 plans. Bankruptcy judges who raise objections to confirmation send the wrong message to creditors. Creditors must protect themselves in Chapter 13 cases. Creditors cannot depend on the bankruptcy judge to review Chapter 13 plans and raise objections not raised by creditors. Judges who routinely object to confirmation invite the deterioration of creditor involvement. When creditors are responsible for their own outcomes, the health of the Chapter 13 program in the district is improved.


 

1  11 U.S.C. § 1324.

 

2  In re Dennis, 230 B.R. 244 (Bankr. D.N.J. 1999) (Creditor that failed to timely file a proof of claim and that filed a tardy objection to confirmation lacks standing to object to plan.). Accord In re Gurst, 76 B.R. 985 (Bankr. E.D. Pa. 1987); In re Stewart, 46 B.R. 73 (Bankr. D. Or. 1985).

 

3  In re Larson, 245 B.R. 609, 614 n.1 (Bankr. D. Minn. 2000).

 

4  See § 216.1 [ Timing of Hearing on Confirmation ] § 115.1  Timing of Hearing on Confirmation before BAPCPA.

 

5  See below in this section, and see § 163.1 [ In General ] § 91.1  In General. See, e.g., In re Turpen, 218 B.R. 908 (Bankr. N.D. Iowa 1998) (Standing to object to confirmation does not depend upon filing or allowance of a proof of claim before confirmation hearing, especially in a district where confirmation hearing is held prior to the claims deadline; however, there is an exception to this standing rule with respect to the disposable income test in § 1325(b)(1).).

 

6  See discussion beginning at § 132.1  1994 Code Amendments Changed the Rules.

 

7  See § 135.7  Untimely Filed Claims in Cases Filed after October 22, 1994.

 

8  In re Larson, 245 B.R. 609, 614 n.1 (Bankr. D. Minn. 2000) (Creditor that failed to file a timely proof of claim has standing to object to confirmation because the timely filed objection to confirmation functions as an informal proof of claim and the plan specifically provided for payment of late-filed claims. “Wholesale Insulation filed an objection to confirmation . . . . Wholesale Insulation failed to timely file a formal proof of claim. Only ‘parties in interest’ may object to confirmation of a plan. 11 U.S.C. § 1324 (1994). Without an allowed claim, most courts hold that a party generally does not have the requisite pecuniary interest to be a ‘party in interest.’ . . . However, Wholesale Insulation timely filed its objection to the plan, and such objection may serve as an informal proof of claim. . . . Wholesale Insulation has standing to object to confirmation based upon its informal proof of claim. . . . [T]he plan in this case specifically provides for payment to late-filed claims, thus negating the general rule requiring disallowance of such claims. Therefore, the filing of a late-filed claim under the circumstances of this case must also give Wholesale Insulation standing to object to the plan.”).

 

9  In re Kressler, 252 B.R. 632 (Bankr. E.D. Pa. 2000) (“Since the failure of a secured creditor to file a proof of claim will not result in the loss of the creditor’s lien and generally speaking, after the bankruptcy case is concluded, the creditor may pursue the collateral to satisfy its lien . . . such a secured creditor would be a ‘party in interest’ and would have standing to object to confirmation of a debtor’s plan which purports to cramdown and avoid the secured creditor’s lien. Likewise, Litton, which is in the same position as a secured creditor who failed to file a proof of claim . . . is a ‘party in interest’ and has standing to object to confirmation.”), aff’d, Nos. CIV. A. 00-5286, 99-22646, 2001 WL 919860, at *2 (E.D. Pa. Aug. 9, 2001) (Distinguishing In re Dennis, 230 B.R. 244 (Bankr. D.N.J. 1999), “[b]ecause the proposed plan results in the extinguishing of a property interest of Litton, the Court finds that Litton has a pecuniary interest in the plan and is therefore a party in interest with standing to object to confirmation.”).

 

10  In re Caldwell, 151 B.R. 131, 132 (Bankr. S.D. Ohio 1992) (If a Chapter 13 case is filed within 12 months of a prior Chapter 7 case, “this Court will require an opportunity for objection for all unsecured creditors whose claims were discharged in the initial Chapter 7 case. Further, those parties must be told specifically that no repayment is proposed for them.”).

 

11  Davis v. Mather (In re Davis), 239 B.R. 573 (B.A.P. 10th Cir. 1999).

 

12  See In re Barnes, 275 B.R. 889, 892 (Bankr. E.D. Cal. 2002) (After conversion to Chapter 13, Chapter 7 trustee has standing to object to exemptions and to confirmation when bankruptcy court awarded Chapter 7 trustee compensation. “The court previously awarded compensation to the former chapter 7 trustee as an administrative expense. Because of this award, he is a ‘party in interest’ with standing to object to confirmation, object to exemptions, and move to convert the case. . . . 11 U.S.C. §§ 522(l), 1307(c), 1324 permit a ‘party in interest,’ not just a creditor, to object to confirmation of a plan and exemptions and to move to convert the case. . . . As an administrative claimant, the former chapter 7 trustee has the necessary financial interest to be considered a party in interest with standing to appear on the motion and objections.”).

 

13  See § 163.1 [ In General ] § 91.1  In General. See, e.g., In re Nottingham, 228 B.R. 316, 321 (Bankr. M.D. Fla. 1998) (Surety objected to confirmation on disposable-income-test grounds. Debtor objected to surety’s claim. “Surety, however, does not hold an allowed unsecured claim. Thus, it may not have standing to raise this objection.”); In re MacDonald, 222 B.R. 69, 73 (Bankr. E.D. Pa. 1998) (“[Section] 1325(b)(1)(B) objection ‘must be raised by the trustee or the holder of an allowed unsecured claim.’”); In re Turpen, 218 B.R. 908, 912 (Bankr. N.D. Iowa 1998) (“Although Comprehensive and the United States are creditors, neither yet has an allowed unsecured claim. Comprehensive’s claim, proof of which has been filed, is not deemed allowed because of the debtors’ objection. . . . The United States has not yet filed a proof of claim. . . . Neither Comprehensive nor the United States is the holder of an allowed unsecured claim whose objection to the plan triggers the disposable income requirement of 11 U.S.C. § 1325(b)(1)(B). Nonetheless, the disposable income issue is before the court in considering debtors’ plan as the objection was made by the standing trustee.”).

 

14  In re Tamez, 110 B.R. 9 (Bankr. S.D. Cal. 1990).

 

15  In re Barrios, 257 B.R. 626, 628 (Bankr. S.D. Fla. 2000) (Unsecured creditor has standing to object to confirmation on the ground that the lien of a wholly unsecured second mortgage holder can be stripped off under Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. 2000). Plan proposed to make direct payments to second mortgage. First mortgage exceeded the value of the homestead. Unsecured creditor objected to confirmation. Debtors admitted that second mortgage lien could be stripped but argued that unsecured creditor lacked standing to force the debtors to do so. “[A] general unsecured creditor[ ] has standing to seek modification of the claim of [the second mortgage holder], another creditor, pursuant to § 506(a).” Bankruptcy court denied confirmation and ordered the debtors to modify the plan to treat the second mortgage holder as a general unsecured creditor or face dismissal of the case.). See also § 128.1 [ Modification of Unsecured Home Mortgage: Before and After BAPCPA ] § 80.13  Modification of Unsecured Home Mortgage: Before and After BAPCPA.

 

16  11 U.S.C. § 1302(b)(2)(B). See In re Stein, 91 B.R. 796 (Bankr. S.D. Ohio 1988); Colandrea v. Colandrea, 17 B.R. 568 (Bankr. D. Md. 1982); In re Erwin, 10 B.R. 138 (Bankr. D. Colo. 1981); In re Perskin, 9 B.R. 626 (Bankr. N.D. Tex. 1981); In re Fizer, 1 B.R. 400 (Bankr. S.D. Ohio 1979). See § 58.5 [ Appear and Be Heard with Respect to Confirmation of a Plan ] § 53.6  Appear and Be Heard with Respect to Confirmation of a Plan.

 

17  Andrews v. Loheit (In re Andrews), 49 F.3d 1404 (9th Cir. 1995). Accord Meyer v. Hill (In re Hill), 268 B.R. 548, 555 (B.A.P. 9th Cir. 2001) (Citing Andrews v. Loheit (In re Andrews), 49 F.3d 1404 (9th Cir. 1995), the statutory duty of the Chapter 13 trustee to appear and be heard with respect to confirmation “necessarily implies that a chapter 13 trustee has standing to object to confirmation of a plan that does not meet ‘each of the requirements’ for plan confirmation.” Trustee has standing to object to the classification of unsecured claims.); In re Shandrew, 210 B.R. 829 (Bankr. E.D. Cal. 1997) (Citing Andrews v. Loheit (In re Andrews), 49 F.3d 1404 (9th Cir. 1995), Chapter 13 trustee has standing to object to confirmation of a plan that proposes to “strip down” wholly unsecured second mortgage notwithstanding that the creditor has “said nothing.”). See § 58.5 [ Appear and Be Heard with Respect to Confirmation of a Plan ] § 53.6  Appear and Be Heard with Respect to Confirmation of a Plan.

 

18  249 B.R. 140 (Bankr. D.S.C. 2000).

 

19  See also §§ 153.1 [ Student Loans ] § 88.6  Student Loans, 229.1 [ 11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors ] § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors, 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation and 246.1 [ Alimony and Support Collection after Confirmation ] § 124.6  Alimony and Support Collection after Confirmation.

 

20  249 B.R. at 144.

 

21  292 B.R. 138 (Bankr. E.D. Tex. 2002).

 

22  292 B.R. at 139–40.

 

23  But see Andrews v. Loheit (In re Andrews), 49 F.3d 1404, 1407 (9th Cir. 1995) (“[T]he primary purpose of the Chapter 13 trustee is not just to serve the interests of the unsecured creditors, but rather, to serve the interests of all creditors.”).

 

24  In re Szostek, 886 F.2d 1405 (3d Cir. 1989).

 

25  11 U.S.C. § 1325(b). See § 163.1 [ In General ] § 91.1  In General.

 

26  In re Brown, 108 B.R. 738 (Bankr. C.D. Cal. 1989) (Chapter 13 trustee lacks standing to object to confirmation on the ground that the plan fails to pay secured claim holder’s interest as required by § 1325(a)(5)(B).). But see Andrews v. Loheit (In re Andrews), 155 B.R. 769, 771–72 (B.A.P. 9th Cir. 1993) (Section 1325(b) does not restrict a Chapter 13 trustee’s standing to object to confirmation. “[Section] 1325(b) can also be read to mean that congress intended merely to limit the objections under § 1325(b)(1) to a restricted class, including only the Chapter 13 trustee and unsecured creditors, where other sections, such as § 1325(a)(5) are not so restricted. We believe this to be the better reading. . . . Nothing in the legislative history of the amendments that added § 1325(b) suggests an intent to deny standing to object under any other subsection other than § 1325(b). . . . We hold that the Chapter 13 trustee has standing to raise an objection to confirmation under § 1325(a)(5).”), aff’d, 49 F.3d 1404, 1408 (9th Cir. 1995) (“The addition of subsection 1325(b)(1) by Congress in 1984 does not deprive standing to Chapter 13 trustees under § 1325(a)(1).”).

 

27  See § 58.5 [ Appear and Be Heard with Respect to Confirmation of a Plan ] § 53.6  Appear and Be Heard with Respect to Confirmation of a Plan.

 

28  See discussion below in this section.

 

29  In re Eaton, 130 B.R. 74 (Bankr. S.D. Iowa 1991) (U.S. trustee does not have standing to object to confirmation under 11 U.S.C. § 1325(b). The broad grant of authority in 11 U.S.C. § 307 cannot modify the specific language of § 1325(b), which reserves objection to confirmation on disposable-income-test grounds to the Chapter 13 trustee or the holder of an allowed unsecured claim.).

 

30  In re Rothman, 204 B.R. 143 (Bankr. E.D. Pa. 1996).

 

31  225 B.R. 290 (Bankr. E.D.N.Y. 1998).

 

32  Fidelity & Cas. Co. v. Warren (In re Warren), 89 B.R. 87 (B.A.P. 9th Cir. 1988); United States v. Rader, No. TH01-217-C-T/H, 2002 WL 1354714, at *1 (S.D. Ind. Apr. 17, 2002) (unpublished) (“The Court has an obligation to determine whether a debtor has carried the burden of showing that all elements required of a plan filed under Chapter 13 have been met, regardless of whether any party in interest objects.”); Beard v. U.S. Trustee (In re Beard), 188 B.R. 220 (W.D. La. 1995) (Bankruptcy court can “sua sponte” raise, reach, and determine good faith under § 1325(a)(3) notwithstanding that the only objections to confirmation concern the amount of debts or the value of collateral.); McCullough v. Brown (In re Brown), 162 B.R. 506, 508 n.3 (N.D. Ill. 1993) (Although no party objected to confirmation, it was appropriate for the bankruptcy judge to raise the issue of improper classification of claims because “the Bankruptcy Judge has an independent obligation to determine whether the plan fulfills the requirements for confirmation under Chapter 13.”); In re Johnson, 160 B.R. 800, 802 (S.D. Ohio 1993) (“[T]he Bankruptcy Court clearly had the authority to decline sua sponte to confirm Debtors’ plan.”), overruled by Lane v. Western Interstate Bank Corp. (In re Lane), 280 F.3d 663 (6th Cir. 2002); In re Leone, 292 B.R. 243 (Bankr. W.D. Pa. 2003) (Bankruptcy court sua sponte denies confirmation on good-faith ground of 36-month plan that pays $205,000 mortgage on a house valued at $138,000 and only 11% to unsecured claim holders.); In re Vincente, 257 B.R. 168, 177 (Bankr. E.D. Pa. 2001) (“[W]e are empowered to raise §§ 1325(a)(3), (a)(5), or (a)(6) objections sua sponte at the confirmation hearings. . . . [W]e would grant the debtor a continuance as of course to meet any objection raised sua sponte or belatedly and/or orally.”); In re Williams, 253 B.R. 220, 223 (Bankr. W.D. Tenn. 2000) (“The court scheduled status conferences in each of the referenced Chapter 13 cases which propose to separately classify and preferentially treat student loan claims. No objections to the proposed classifications were raised by any creditor or the standing Chapter 13 trustee. Nevertheless, the bankruptcy judge has an independent obligation to determine whether a plan fulfills the requirements for confirmation under Chapter 13. . . . [T]he court determines that the proposed plans are not capable of confirmation because they discriminate unfairly against general unsecured creditors.”); In re Fox, 249 B.R. 140, 144 (Bankr. D.S.C. 2000) (“A bankruptcy court can raise an objection to the plan sua sponte.”); In re Walsh, 224 B.R. 231, 234 (Bankr. M.D. Ga. 1998) (“[E]ven though neither the trustee nor any creditor has any pending objection to confirmation, the Court, sua sponte, has raised an inquiry as to whether Debtors have satisfied the disposable income requirement and as to whether the plan has been proposed in good faith.”); In re Mammel, 221 B.R. 238, 242 (Bankr. N.D. Iowa 1998) (“[E]ven though no creditor has appeared to object, the Court retains an independent obligation to examine plan provisions and ensure that they comply with the Code.”); In re Games, 213 B.R. 773, 776 (Bankr. E.D. Wash. 1997) (Court has “authority and duty to monitor statutory compliance even when no objection has been filed.”); In re Ruggles, 210 B.R. 57, 59 (Bankr. D. Vt. 1997) (“Although no objections to confirmation were interposed, we have a statutory duty to ensure that these fundamental conditions to confirmation have been met.” Court examines good faith and best-interests-of-creditors test and confirms the plan.); In re Limbaugh, 194 B.R. 488, 489 (Bankr. D. Or. 1996) (Although “no creditor or party-in-interest filed an objection to confirmation,” denies confirmation on “unfair discrimination” ground where plan proposed to pay criminal restitution in full and nothing to unsecured claim holders. “Even in the absence of an objection, however, the Bankruptcy Code requires this court to make an independent determination of whether a proposed Chapter 13 plan complies with the requirements of 11 U.S.C. § 1325.”); In re Farmer, 186 B.R. 781, 782 (Bankr. D.R.I. 1995) (“Notwithstanding the absence of any objection to confirmation, the Court has an independent duty to determine that the plan meets all Code requirements.” Court denies confirmation of a 0% plan in which the debtor’s monthly budget shows an unexplained $150 expense item for “other.”); In re Anderson, 173 B.R. 226, 228 (Bankr. D. Colo. 1993) (“Although no party has objected to confirmation on the issue of the propriety of subclassification, this Court has the independent obligation to determine whether the Chapter 13 plans at issue fulfill the requirements of the Bankruptcy Code.”); In re Eiland, 170 B.R. 370 (Bankr. N.D. Ill. 1994) (Although no party objected to confirmation, bankruptcy judge has independent obligation to determine whether the plan satisfies the requirements for confirmation.); In re Christophe, 151 B.R. 475, 477 (Bankr. N.D. Ill. 1993) (“This Court has an obligation to determine whether debtors carry their burden to show that all elements required of a Plan under Chapter 13 have been met by them, whether or not any party in interest objects.” Court denies confirmation of a plan separately classifying nondischargeable student loan for 100% payment and general unsecureds for 32% payment, notwithstanding absence of objection from any party.); In re Husted, 142 B.R. 72, 72 (Bankr. W.D.N.Y. 1992) (“[T]he Court has the authority and duty to examine a plan even when there are no objections to its confirmation to ensure that the requirements of 11 U.S.C. § 1325 have been compiled with.”); In re Huerta, 137 B.R. 356, 366 (Bankr. C.D. Cal. 1992) (“Even if all the creditors of a proposed plan accepted, and even where no creditor opposes confirmation, the Court still has an independent duty to determine debtor’s good faith.”); In re Foulk, 134 B.R. 929 (Bankr. D. Neb. 1991) (Notwithstanding absence of objection from any party in interest and notwithstanding a trustee’s motion that the plan should be confirmed, court denies confirmation because plan violates best-interests-of-creditors-test under § 1325(a)(4).); In re Henricksen, 131 B.R. 467, 471 (Bankr. N.D. Okla. 1991) (“It is the Court’s independent duty to determine whether a Ch. 13 plan has been proposed in good faith, even absent any objection to confirmation of the plan, . . . [although] absent objection ‘the court may determine that the plan has been proposed in good faith . . . without receiving evidence on such issue.’ This discretionary procedural option does not relieve the debtors from their duty of proposing a plan in good faith or the Court from its responsibility of enforcing the requirements of 11 U.S.C. § 1325(a)(3).”); In re Tamez, 110 B.R. 9 (Bankr. S.D. Cal. 1990); In re Reyes, 106 B.R. 155 (Bankr. N.D. Ill. 1989); In re Dornon, 103 B.R. 61 (Bankr. N.D.N.Y. 1989); In re Carr, 95 B.R. 71 (Bankr. S.D. Ohio 1989); In re Girdaukas, 92 B.R. 373 (Bankr. E.D. Wis. 1988); In re Stein, 91 B.R. 796 (Bankr. S.D. Ohio 1988); In re Gurst, 76 B.R. 985 (Bankr. E.D. Pa. 1987); In re Jewell, 75 B.R. 318 (Bankr. S.D. Ohio 1987); In re Terrill, 68 B.R. 441 (Bankr. C.D. Ill. 1987); In re Hartdegen, 67 B.R. 230 (Bankr. N.D. Ala. 1986); In re Schenk, 67 B.R. 137 (Bankr. D. Mont. 1986); In re Hardy, 56 B.R. 95 (Bankr. N.D. Ala. 1985).

 

33  11 U.S.C. § 524(d).

 

34  See discussion of projected disposable income test beginning at § 91.1  In General.

 

35  Smith v. ITT Fin. Servs. (In re Smith), 100 B.R. 436 (S.D. Ind. 1989) (Bankruptcy court is without sua sponte authority to object to confirmation under § 1325(b) because the express language of the statute permits only the trustee or the holder of an allowed unsecured claim to raise that objection.); In re MacDonald, 222 B.R. 69, 73–74 (Bankr. E.D. Pa. 1998) (“[Section] 1325(b)(1)(B) objection ‘must be raised by the trustee or the holder of an allowed unsecured claim . . . such an objection cannot be raised sua sponte.’ . . . Since § 1325(b)(1)(B) objections cannot be raised sua sponte, and the procedure for interested parties to raise such objections requires a prior notice of same to the debtors . . . in writing, we believe that it is inappropriate for the court to consider § 1325(b)(1)(B) objections which are not timely filed in writing.”); In re Reyes, 106 B.R. 155 (Bankr. N.D. Ill. 1989) (Bankruptcy court is without standing to raise disposable income test sua sponte.); In re Stein, 91 B.R. 796, 800 (Bankr. S.D. Ohio 1988) (Court has an independent duty to examine the requirements of § 1325(a). “Although § 1325(b) may not be raised by a bankruptcy court sua sponte, it is appropriate for the court to consider the standards of § 1325(b) in determining whether a debtor’s proposed plan comports with § 1325(a)(3)’s good faith requirement.”).

 

36  See, e.g., In re Thibodeau, 248 B.R. 699, 705 (Bankr. D. Mass. 2000) (On the trustee’s classification objection to confirmation under § 1322(b)(1), court uses good-faith test to deny confirmation when the debtor had $72.22 of excess income. “[A] Plan that proposes to discriminate against a class of creditors is not filed in good faith where the Debtor does not apply the entire amount of her excess income towards paying her creditors. Although neither the Chapter 13 Trustee, nor other creditors have objected to the Debtor’s projected monthly payment amount . . . the Debtor has an additional $72.22 in excess income per month that is not applied to Plan payments . . . . The Court cannot find that the Debtor’s discrimination has been proposed in good faith where a substantial sum of money is left unaccounted for.”); In re Walsh, 224 B.R. 231, 234 (Bankr. M.D. Ga. 1998) (Bankruptcy judge can raise disposable-income-test objection to confirmation even when trustee recommends confirmation and no creditor has objected. Good-faith factors overlap with disposable-income-test considerations and substantiality of repayment is appropriately considered in both contexts. Thirty-six-month plan would pay $1,200 per month from net income of $3,346 with no dividend to unsecured creditors. Debtors proposed to keep two cars, only one of which was necessary. There was no objection to confirmation and debtors argued that disposable income test was not before the court. “This assertion ignores the reality of practice in the Middle District of Georgia. . . . [T]he trustee in this district routinely requires debtors in all Chapter 13 cases to dedicate disposable income to plans for a period of 36 months. . . . This requirement by the trustee is not initiated by the filing of a formal written objection to every plan. All of the participants in the confirmation process in this district understand that the trustee imposes this requirement. If the trustee is persuaded by examination of the debtor and consultation with the debtor’s counsel that this requirement is satisfied, . . . the trustee will recommend confirmation of the plan to the court. Such a recommendation does not, however, propose to usurp the court’s discretion to conclude that a debtor has not complied with section 1325(b)(1). . . . It is not necessary for the trustee to both recommend confirmation and at the same time oppose confirmation in order to preserve to the court the discretion to determine whether the debtor has complied with the requirement for the dedication of disposable income to the plan. . . . Here, even though neither the trustee nor any creditor has any pending objection to confirmation, the Court, sua sponte, has raised an inquiry as to whether Debtors have satisfied the disposable income requirement and as to whether the plan has been proposed in good faith.”); In re Fulton, 211 B.R. 247, 255 (Bankr. S.D. Ohio 1997) (“[Section] 1325(b) may not be raised by a bankruptcy court sua sponte. If ‘there is no pending objection by the Chapter 13 Trustee or the holder of an allowed unsecured claim, the court cannot, sua sponte, deny confirmation under § 1325(b) to the debtors’ amended plan.’ . . . However, it is equally clear and also appropriate to the Court to consider the principles of § 1325(b) in determining whether the debtor’s proposed plan conforms to the good faith requirements of § 1325(a)(3). . . . Even when there are no pending objections to confirmation, a bankruptcy court, ‘nevertheless, has an independent duty to ensure that the Plan meets the requirements for confirmation set forth in 11 U.S.C. § 1325(a), including the good faith standard of § 1325(a)(3).’ . . . An analysis of a debtor’s budgeted monthly expenses is an appropriate element of a bankruptcy court’s good faith calculus.” Court refuses confirmation of plans that pay loans to retirement plans in full while paying less than 100% of other unsecured claims, applying Harshbarger v. Pees (In re Harshbarger), 66 F.3d 775 (6th Cir. 1995).).