A Chapter 13 repayment plan must be “confirmed” by the bankruptcy court in order to be finalized. Until a plan is confirmed, it is not yet permanent and interested parties may object to its terms. The court usually holds a confirmation hearing to decide if a Chapter 13 plan should be confirmed. Read on to find out what the Chapter 13 confirmation hearing entails and how it works.
(To learn more about Chapter 13 plans, see Your Obligations Under a Chapter 13 Bankruptcy Plan.)
After you file your Chapter 13 repayment plan, all interested parties have a chance to review and decide if they agree with it. A confirmation hearing usually takes place because a creditor or the bankruptcy trustee has a problem with one or more of its terms. When a party dislikes a provision of the plan, it can “object” to its confirmation and the judge will decide the issue at the confirmation hearing. So who might object to your Chapter 13 plan and why?
The Chapter 13 bankruptcy trustee’s job is to review your case and your repayment plan to make sure it complies with bankruptcy laws. This includes reviewing all of your income and expense documentation to determine if your plan payments are high enough and your creditors are getting adequate repayment. A bankruptcy trustee may object to your plan if he or she feels that you should be paying more to creditors or if your plan does not seem feasible (for example if you don’t make enough income to afford your monthly payments).
Any of your creditors may also object to your Chapter 13 plan if they feel they are not getting paid enough. The creditors who are most likely to object to your plan are your mortgage company or car lender. Mortgage holders will object to a plan if it underestimates the amount of arrears that must be paid or if the monthly payment amount is not enough to cover arrears. Car lenders usually object on similar grounds or if you are trying to cram down their loan and they do not agree with your estimation of the car’s value.
At the confirmation hearing, the bankruptcy debtor and any objecting parties explain to the judge why their version of the plan should be confirmed and finalized. Even if there was no objection, the judge may have questions regarding your plan. While some issues involve complex legal principals, the majority of objections revolve around how much creditors should be getting paid. As a result, most judges refrain from making a decision at the first hearing and will usually allow the parties more time to settle the matter. If a settlement cannot be reached, the judge will make the decision for the parties and may hold an evidentiary hearing for the parties to present evidence and argue their positions.
Most courts and judges have their own way of conducting confirmation hearings so whether you will be required to go depends on where your bankruptcy case was filed. In many districts your appearance will not be necessary if you have a lawyer because your lawyer will go and argue on your behalf. However, some judges do require debtors to be present at confirmation hearings or may require your presence if they have specific questions for you. In other districts, if no one has objected to your plan, the court might not hold a hearing and instead ask that you submit a confirmation order for the court’s review.
This also depends on where your case was filed. Some courts automatically schedule a confirmation hearing to take place a few hours after your mandatory meeting of creditors while others do not schedule them until weeks later. However, a confirmation hearing usually must take place within 45 days of your meeting of creditors.
(To learn more about the procedures in a Chapter 13 bankruptcy case, see the articles in our Chapter 13 Bankruptcy topic area.)