Separate Classification and Unfair Discrimination – Co-obligors Debts

By Jeffrey M. Kellner, Chapter 13 Trustee (Dayton, OH)

As a Chapter 13 Trustee faced with numerous proposed plans which discriminate in the payments to non-priority unsecured claims, it does not happen often when the plan proposes to pay the unsecured claims of co-obligors less than the 100% dividend proposed to non-priority unsecured claims.

The issue was presented before the Court at a contested confirmation hearing on a creditor’s Objection to Confirmation. The plan proposed a 100% dividend to non-priority unsecured creditors; except, no payments would be made to unsecured claims with co . . .

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