Cite as: Keith M. Lundin, Lundin On Chapter 13, § 57.8, at ¶ ____, LundinOnChapter13.com (last visited __________).
There are Chapter 13 cases in which it is appropriate for creditors to move to convert or dismiss or for relief from the stay based on a debtor’s failure to perform preconfirmation duties. Chapter 13 debtors are required to file many documents,1 to propose a plan,2 to appear at the meeting of creditors,3 to cooperate with the trustee4 and to commence making timely payments5—all in advance of confirmation. If a creditor’s stake is great, counsel should review the court file and consult with the Chapter 13 trustee to determine whether the debtor has performed all statutory duties. If not, a motion to convert or dismiss before confirmation is the remedy.6
Determining whether the debtor has complied with preconfirmation duties is not always simple. Creditor’s counsel may have to review an incomplete court file, may have to take discovery from the debtor,7 and may have to hound the trustee for information about the commencement of payments into the plan and so forth.
Because Chapter 13 cases move quickly in most jurisdictions, a preconfirmation motion to convert or dismiss may be joined by the court with the hearing on confirmation. Strategically, this is exactly what creditor’s counsel wants—if the plan fails of confirmation, the case will probably be dismissed or converted at the confirmation hearing. Preconfirmation motions to dismiss or convert are especially effective when the debtor’s non-performance of duties is indicative of an abusive or bad-faith filing.8 If the debtor has failed to make timely payments as required by 11 U.S.C. § 1326, counsel should seek the trustee’s participation in a motion to dismiss or convert.9
1 See § 41.2 [ Duty to File Statements and Schedules ] § 41.1 Duty to File Statements and Schedules.
2 See § 55.1 [ Debtor Must File a Plan ] § 51.2 Debtor Must File a Plan.
3 See § 42.2 [ Personal Appearance by Debtor ] § 43.3 Personal Appearance by Debtor.
4 See § 41.1 [ Duty to Cooperate ] § 40.1 Duty to Cooperate.
5 See § 43.1 [ First Test of Debtor’s Good Intentions ] § 44.1 First Test of Debtor’s Good Intentions.
6 See §§ 311.2 [ Conversion on Request of Creditor or Trustee ] § 141.2 Conversion on Request of Creditor or Trustee and 332.1 [ Procedure, Timing and Form ] § 152.1 Procedure, Timing and Form.
7 See § 66.4 [ Preconfirmation Discovery Rights of Creditors ] § 56.5 Preconfirmation Discovery Rights of Creditors.
8 See § 334.1 [ Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings ] § 152.4 Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings.
9 See §§ 43.4 [ Consequences of Failure to Commence Payments ] § 44.4 Consequences of Failure to Commence Payments and 58.8 [ Ensure Debtor Commences Making Timely Payments ] § 53.9 Ensure Debtor Commences Making Timely Payments.