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Bankruptcy Court updating procedure for Chapter 13 confirmation hearings

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The United States Bankruptcy Court for the Southern District of Indiana will be changing how it handles Chapter 13 confirmation hearings beginning July 1.

Under the new procedure, the filing of an amended plan will vacate a hearing scheduled on a creditor’s objection to confirmation only if in advance of the hearing: 1) the creditor withdraws the objection; 2) an agreed entry, signed by the debtor and objecting creditor is filed; or 3) a motion to continue the hearing is filed and granted.

Typically, the Bankruptcy Court has vacated a hearing on a creditor’s objection to confirmation if an amended plan is filed prior to the hearing, regardless of whether the amended plan actually resolves or addresses the objection. The creditor is then ordered to file another objection to the amended plan, even if the amended plan doesn’t alter the creditor’s treatment from the previous plan.

A release from the court announcing the change says creditors’ counsel have pointed out that this procedure runs afoul of 11 U.S.C. Section 1323(c), with respect to objections by secured creditors.

“The Court also observes that its current procedure of automatically vacating a hearing on an objection to confirmation upon the filing of an amended plan arguably encourages some debtors to file an amended plan on the eve of the confirmation hearing with the hope of simply delaying the adjudication of a valid creditor objection,” the June 17 order by Chief Judge James K. Coachys says. “While the Court understands why debtors may wish to delay litigation, the practice of filing an amended plan that does not address or resolve an objection often leads to an inefficient use of limited judicial resources.”

Under the new procedure, the filing of an amended plan prior to a scheduled confirmation hearing will always vacate the hearing as to an objection to confirmation filed by the Chapter 13 trustee, as is the current procedure.

The full order is available on the court’s website.

 

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