The bankruptcy case Hernandez, Rey J.; In re, (Bankr. N.D. Ill. 2009) denied a secured creditors objection to the confirmation of a debtor’s Chapter 13 repayment. The creditor in this bankruptcy case, GMAC objected to the amount of amount of their monthly payments ($426 a month) and the fact that they would not receive “equal monthly payments.”
The details of the case:
The Chapter 13 debtor’s proposed plan called for 60 monthly payments of $1,830. GMAC held a claim against the debtor that was secured by a 2006 Chevrolet Impala that the debtor valued at $17,300. Al¬though the plan provided that GMAC would receive $426 each month, the lender objected to confirmation on the basis that its claim was not adequately protected and the plan failed to provide it with equal monthly payments. The court overruled the objections, stating that GMAC offered no evidence that the payments it was scheduled to receive were insufficient. In addition, GMAC had not asked for stay relief based on lack of adequate protection. As to the issue of equal monthly payments, the court noted that the plan provided for GMAC to receive the same amount each month. But even if the plan didn’t provide for equal monthly payments to GMAC, that fact would not be a basis for denying plan confirmation because Section 1325(a)(5) requires equal monthly payments into the plan, not equal distributions to a particular creditor.
I think GMAC wanted to receive the same distribution as other creditors in the plan. Most likely some other creditor was receiving more money out of the $1,830 monthly distribution. Debtors can expect this type of aggressive positioning by creditors; but in many cases it is to the benefit of the debtor to pay as much money as possible to some creditors (as opposed to others) especially priority creditors, such as student loan lenders and the IRS. If you’re considering Chapter 13 bankruptcy speak with a bankruptcy attorney about how a possible repayment plan would work in your situation.