Cite as: Keith M. Lundin, Lundin On Chapter 13, § 116.4, at ¶ ____, LundinOnChapter13.com (last visited __________).
There is no official form for an objection to confirmation of a Chapter 13 plan. The Federal Rules of Civil Procedure do not recognize a pleading styled as an objection.1
Under Bankruptcy Rule 3015(f), an objection to confirmation of a Chapter 13 plan is governed by Rule 9014. Bankruptcy Rule 9014 provides that an objection to confirmation is a contested matter and relief “shall be requested by motion.”2 The motion might be captioned (awkwardly) as a motion to deny confirmation.
A motion for relief from the stay is not a substitute for a timely objection to confirmation.3 Although the Chapter 13 trustee has standing to object to confirmation, one court held that a “recommendation” against confirmation did not comply with the requirements of Bankruptcy Rule 3015(f) and thus was not effective as an objection to confirmation.4 A proof of claim is not an objection to confirmation even when “rejection” or similar words are prominent on the face of the form.5 A brief filed after the hearing on confirmation is not an objection to confirmation.6
An objection to confirmation must be filed with the court, transmitted to the U.S. trustee, and served on the debtor, the debtor’s attorney, the trustee and any other entity designated by the court.7 “Service” and “filing” are defined in Bankruptcy Rules 7004 and 7005. An objection to confirmation must be served in the manner of a summons under Bankruptcy Rule 7004. Typically this means service by mail consistent with Bankruptcy Rule 7004(b). An objection to confirmation is not filed for purposes of a deadline until received by the clerk of the bankruptcy court.8 “Transmittal” to the U.S. trustee is a process left to the imagination of bankruptcy practitioners.9
It has been held that a bankruptcy court has discretion to hear an objection to confirmation when the objecting creditor served the debtors’ attorney but failed to serve the debtors individually, notwithstanding the requirement of service on both in Rule 7004(b)(9).10 A complaint objecting to discharge and dischargeability, although filed after the deadline in a local rule for objections to confirmation, was treated as a timely filed objection to confirmation notwithstanding that the complaint was nonsensical at the predischarge stage of the Chapter 13 case.11
Unfortunately, “any other entity designated by the court” for service of an objection to confirmation under Bankruptcy Rule 3015(f) typically isn’t designated by order, by local rule or by custom. In many jurisdictions, it is routine for an objecting creditor to serve only the debtor, the Chapter 13 trustee and the U.S. trustee. Other creditors will rarely be aware of an objection to confirmation. This lack of notice works to the advantage of debtors who can often negotiate a settlement with the objecting creditor without other creditors even being aware of the objection. It will sometimes be to the advantage of an objecting creditor to serve other creditors, even in the absence of a local rule requiring expanded service. When the objection affects all creditors—such as a best-interests-of-creditors-test objection12 or a disposable-income-test objection13—enlisting the support of other creditors by service of the objection can better position the objecting creditor to defeat confirmation or to force favorable modifications of the plan by the debtor.
1 See Fed. R. Bankr. P. 7007 (incorporating Fed. R. civ. P. 7).
2 Fed. R. Bankr. P. 9014.
3 See In re Botteri, 108 B.R. 164 (Bankr. S.D. Ohio 1989) (Motion for relief from the stay filed after deadline for objections to confirmation is untimely and is precluded by the effect of confirmation under § 1327.). But see In re Cook, 253 B.R. 249 (Bankr. E.D. Ark. 2000) (Objection to confirmation that was untimely under local rules is appropriately considered because motion for relief from the stay raises the same issues and creditor that completed nonjudicial foreclosure sale before the petition is entitled to prevail on the merits.).
4 In re Stein, 91 B.R. 796 (Bankr. S.D. Ohio 1988) (interpreting similar language of former Bankruptcy Rule 3020(b)(1)).
5 In re Abrams, No. 01-11493-MAM-13, 2002 WL 1404761, at *4 (Bankr. S.D. Ala. Mar. 8, 2002) (unpublished) (Proof of claim that stated “[i]nterest will be computed by the Trustee’s office as provided in the Plan” is not an objection to confirmation of a plan that omitted postconfirmation interest. “Nuvell cannot rely on the fact that it put in the language of its proof of claim a request for interest. If it is not being paid as it requested, it needed to object to the plan.”); In re Duggins, 263 B.R. 233, 239–40 (Bankr. C.D. Ill. 2001) (Proof of claim is not an objection to confirmation; rather, confirmation under § 1327(a) trumps the temporary allowance of claims under § 502(a). “SEARS’ contention that a proof of claim has a crossover effect to operate as, or in lieu of, an objection to confirmation, is not supported by the Federal Rules of Bankruptcy Procedure. Fed. R. Bankr. P. 3015(f) expressly provides for the filing of a written objection to confirmation and for service of the objection on the debtor, the case trustee and the U.S. Trustee, before confirmation of the plan. Proofs of claim are separately addressed under different Rules and are not required to be served by the claimant on any party and, in this Court’s experience, are usually not served on the debtor by the claimant. Nothing in the Bankruptcy Code or Rules indicates an intent to permit a proof of claim to serve a dual function as an objection to plan. . . . Because all creditors receive a copy of the Chapter 13 plan but not filed proofs of claim, the plan confirmation process is the preferred procedure for ensuring adequate notice of and opportunity to object to proposed secured claim amounts which affect the amount of money that unsecured creditors receive.”); In re Sanders, 243 B.R. 326, 327, 331 (Bankr. N.D. Ohio 2000) (“Rejection” noted on face of proof of claim is not effective as an objection to confirmation; confirmed plan limits arrearage claim notwithstanding timely filing of an inconsistent proof of claim prior to confirmation. Plan provided that secured creditors would not be entitled to attorneys’ fees or costs. Plan also proposed to pay arrearage claim to mortgage holder in the amount of $4,000. Mortgage holder filed timely preconfirmation proof of claim for $6,965.73, noting “The debtor’s Plan is REJECTED” on the face of the proof of claim. “Objection to the confirmation of a proposed Chapter 13 plan may be made pursuant to provisions of Rule 3015(f) . . . . TMS’s attempt to reject the Debtor’s Plan within the contents of its proof of claim was in derogation of Rule 3015(f) and is of no legal consequence. . . . [A] proof of claim is not an appropriate pleading to object to the substance of a plan. Relief in the latter regard is only obtainable as provided under the auspices of Code §§ 1324, 1325 and under Rule 3015(f). . . . Herein, the Debtor’s plan was filed prior to TMS filing its subject claim against the Debtor’s bankruptcy estate. The fact that TMS lodged an objection to the Plan within its proof of claim evinces that TMS was noticed of the Plan and the Plan’s proposed treatment of its claim. TMS failed to file an appropriate objection to the Plan or appeal the Court’s order of confirmation.”); In re Holmes, 225 B.R. 789, 791 (Bankr. D. Colo. 1998) (“[A] creditor has an affirmative obligation to object to confirmation of a plan if such creditor believes the plan inadequately provides for its claim . . . . A creditor cannot simply rely, at the confirmation hearing, on the fact that it has filed a proof of claim to which the debtor has not, independently, objected.”).
6 See In re MacDonald, 222 B.R. 69 (Bankr. E.D. Pa. 1998) (Disposable-income-test objection raised by creditor for first time in post-hearing brief is not a timely filed objection to confirmation.).
7 Fed. R. Bankr. P. 3015(f), 9014, 7004.
8 See In re Carbone, 254 B.R. 1, 2–5 (Bankr. D. Mass. 2000) (Creditor’s objection to confirmation was untimely because it was filed more than 30 days after the date first set for the meeting of creditors, notwithstanding that meeting of creditors was continued; although plan was modified at the meeting of creditors, objection filed 32 days after the modified plan is still untimely. The debtor scheduled CFA as a creditor, and the court gave notice that the meeting of creditors was set for March 31, 2000. On March 23, the debtor notified all parties that the § 341 meeting was rescheduled to April 14. At the § 341 meeting on April 14, the debtor modified the plan to change the treatment of the IRS and the Massachusetts Department of Revenue. The trustee and the debtor “signed a statement indicating neither notice to other creditors or a hearing on the modification were necessary because the modification did not adversely affect creditors.” On May 15, counsel for CFA mailed an objection to confirmation. The objection was received and filed on May 16. Citing local bankruptcy rules, “an objecting party must file the objection with the clerk of court . . . before the later of thirty (30) days after the first date set for the meeting of creditors, regardless of subsequent rescheduling of the meeting, or thirty (30) days after the debtor serves a modified plan on the Chapter 13 [trustee] and the creditors. . . . CFA filed its objection to confirmation . . . forty-six (46) days after March 31, 2000, ‘the date first set for the section 341 meeting.’ . . . CFA’s objection was untimely when measured from the date first set for the § 341 Meeting. . . . The mere mailing of pleadings, while sufficient to complete service of pleadings . . . is insufficient to affect filing. Thus, the filing of CFA’s objection was not complete until the clerk of the Court received it on May 16 . . . thirty-two (32) days after the § 341 Meeting was held, and was therefore untimely, even under CFA’s erroneous interpretation of [the local rule].”).
9 Not unlike the requirement in new Bankruptcy Rule 1007(f) that the debtor shall “submit” (not file, serve or transmit) a verified statement of social security number. See § 34.4 [ Statement of Social Security Number ] § 36.6 Statement of Social Security Number.
10 See Beard v. United States Trustee (In re Beard), 188 B.R. 220, 224–25 (W.D. La. 1995) (“Rule 3015, incorporating Rules 9014 and 7004, does seem to require service of an objection to confirmation of a plan upon both the debtor’s attorney and the debtor individually. . . . [T]he policies ascribed by the Supreme Court [in Pioneer Investment Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993)] to Chapter 11 apply to Chapter 13 in this context as well: namely ‘reorganization with the aim of rehabilitating the debtor and avoiding forfeitures by creditors.’ . . . [T]he bankruptcy judge correctly exercised its equitable discretion in excusing [the creditor’s] failure to make service upon the debtors individually . . . . [T]he debtors’ attorney had timely received the objection to the plan and had even submitted a written response . . . . [T]he reason for the [creditor’s] failure to serve the debtors individually was merely an honest and good faith oversight and not an intentional effort to deprive the debtors of adequate notice of their objection.”).
11 Kahn v. Dastejerdi (In re Dastejerdi), Nos. 01-11725-SSM, 01-1134, 2001 WL 1168178, at *5 (Bankr. E.D. Va. Sept. 21, 2001) (“Since the objections raised by the complaint were in some sense before the court, even if not in the proper procedural form, prior to confirmation of the plan, the court concludes that it has the discretion to entertain them, even though they were not asserted until after the time had passed under the local rules for objecting to confirmation. This is particularly true where the issues raised by the objection are not tangential or trivial but rather go to the very integrity of the chapter 13 filing.”). See also § 343.1 [ Timing and Procedure for Discharge and Objecting to Discharge ] § 156.1 Timing and Procedure for Discharge and Objecting to Discharge for timing and procedure for objecting to discharge in a Chapter 13 case.
12 See discussion of best-interests-of-creditors test beginning at § 90.1 In General: Plan Payments vs. Hypothetical Liquidation.
13 See discussion of projected disposable income test beginning at § 91.1 In General.