You must propose a plan to repay part or all of your debts when filing Chapter 13 bankruptcy. The bankruptcy judge decides whether your plan can be approved at the confirmation hearing. Continue reading to learn more about the confirmation hearing, including when it takes place, who is invited, and what happens if your Chapter 13 plan is not approved.
The Repayment Plan for Chapter 13
In Chapter 13, you propose a three- to five-year payment plan. The month after you file your case, you’ll make your first payment. The funds are held by the Chapter 13 bankruptcy trustee until the judge approves your Chapter 13 plan, after which they are distributed to creditors.
Hearing on Confirmation
The bankruptcy judge must approve (confirm) your Chapter 13 plan. The bankruptcy court judge will use the confirmation hearing to determine the following:
- whether your plan is feasible and you’ll be able to make the payments on time, and
- whether you filed your plan in good faith or not, your unsecured creditors will receive the same amount of money or more than they would have received if you had filed for Chapter 7 bankruptcy.
Timing of Confirmation
Within 45 days of the 341 meeting of creditors, the court will schedule the confirmation hearing. The hearing will be announced to your creditors at least 28 days in advance.
You are not required to attend the confirmation hearing if you are represented by an attorney, but you may do so if you wish. You must appear if you are not represented by counsel, or your Chapter 13 case will be dismissed.
What Takes Place During the Hearing?
You will report to the assigned judge’s courtroom when you appear for the confirmation hearing. Any plan objections that were not resolved before the hearing will be argued by the trustee or creditor when they are called. The judge will consider the arguments and determine whether your plan meets the requirements for confirmation. Both you and your creditors are bound by the plan once it is confirmed.
Objections at the Confirmation Hearing should be planned ahead of time.
The confirmation of your plan may be challenged by your creditors or the Chapter 13 bankruptcy trustee. Among the most common objections are:
- The plan does not commit all available funds for the three or five-year plan period, or it does not commit all available funds for the three or five-year plan period.
- Under the plan, you haven’t adequately provided for creditors.
For example, if you want to keep the property that serves as collateral in Chapter 13, you must pay all past due amounts owed to secured creditors, which are usually the holders of a mortgage or car loan. In addition, you must pay off all of your unsecured debts, such as credit card balances, medical bills, and personal loans, with your disposable income. Furthermore, these creditors cannot receive less than they would have received if you had filed for Chapter 7. The “best interests of creditors” test is what it’s called.
In many cases, an objection can be resolved prior to the hearing. If the trustee or a creditor claims that the expenses listed in Schedule J are excessive, you can resolve the issue by providing proof of your expenses. Similarly, if a creditor claims you aren’t paying enough, you can settle the dispute by changing your payment schedule to increase the amount you pay.
If the Court Approves Your Plan During Your Hearing
Following confirmation, the trustee will use the monthly payments you send in to pay the creditors listed in your Chapter 13 plan. Making timely and regular payments to the trustee is critical to the success of your case. If you are unable to make your Chapter 13 plan payments, contact the trustee’s office right away. They can assist you in modifying your plan payments.
If Your Plan Isn’t Confirmed by the Court
If the court rejects your proposed plan, the trustee will refund your money, minus any adequate protection payments made to ensure that a secured creditor—usually the holder of your car payment—is not financially harmed during the confirmation process (a bankruptcy requirement).