A proposed Chapter 13 repayment plan must be confirmed—or approved—by the bankruptcy court before becoming final. Before confirmation, parties with interests that could be affected by the plan can object to its terms. The court usually holds a confirmation hearing to decide if a Chapter 13 plan meets necessary requirements. 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.)

Plan Confirmation Objections

All interested parties have a chance to review and decide if they agree with the repayment plan. A confirmation hearing usually takes place because a creditor or the bankruptcy trustee has a problem with one or more of its terms. A party who dislikes a provision of the plan can file an “objection” and the judge will decide the issue at the confirmation hearing.

So who might object to your Chapter 13 plan and why?

• Bankruptcy trustee. The Chapter 13 bankruptcy trustee’s job is to review the 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 it appears that you should be paying more to creditors or if your plan doesn’t seem feasible (for example if you don’t make enough income to afford your monthly payments).
• Creditors. Most would agree that filing for bankruptcy is an efficient way to stop creditor collection efforts in their tracks. However, it doesn’t silence creditors altogether or prevent them from participating in a bankruptcy case. An unsatisfied creditor can object to almost anything that happens in bankruptcy, as long as the issue affects the creditor in some way. For instance, a creditor can object to something filed by the debtor (the person who owes the debts), a course of action proposed by a bankruptcy trustee (the official tasked with managing the case), or even a position taken by the judge.

Here are common things that might elicit an objection in a bankruptcy case:

• property the debtor lists as exempt from creditors on Schedule C
• expenses the debtor claims on Schedule J
• the amount the debtor proposes to pay the creditor
• a trustee’s motion to abandon the debtor’s property (instead of selling it for the benefit of the creditors)
• the discharge (wiping out) of a particular debt
• an uncollectible claim filed by another creditor, and
• fees requested by the debtor’s attorney or other professional appointed by the court.

The objections that are the most damaging to a debtor are objections to the dischargeability (wiping out) of a particular debt and an objection to debtor’s general discharge (the complete bankruptcy).

General Discharge Objections

An objection to the debtor’s general discharge has a broader impact and requires more effort to be successful. A creditor (or the trustee) will have to file an adversary proceeding (a lawsuit) within 60 days of the date first set for the 341 meeting of creditors—the one court appearance all debtors must attend. Then the creditor must prove the filer committed at least one of the following acts during or before the bankruptcy case:

• defrauded a creditor
• concealed, destroyed, or transferred property of the bankruptcy estate
• destroyed, lost, or failed to create adequate records
• failed to explain the loss of assets, or
• lied under oath.

If the court denies the discharge, the debtor will continue to remain liable for all the debts after the bankruptcy case gets dismissed.

(Learn more about Adversary Proceedings in Bankruptcy.)

Objections to a Particular Debt

A self-interested creditor will tend to challenge only the discharge of a particular debt in the adversary proceeding. If the general bankruptcy discharge remains in place, it will eliminate all other dischargeable debts, thereby getting rid of any competition for the debtor’s resources after the case ends.

An individual debt can be declared nondischargeable if:

• it arises as a result of acquiring money or property by fraud
• it comes about due to a willful and malicious act
• it results from embezzlement, larceny, or breach of fiduciary duty
• you failed to list the debt on your bankruptcy paperwork, or
• it’s a recent credit card charge for cash advances or luxuries (considered presumptive fraud).

(For more information, read Objections to the Bankruptcy Discharge.)

What Happens at the Confirmation Hearing?

The bankruptcy debtor and any objecting parties use the confirmation hearing explain to the judge why their version of the plan should be confirmed and finalized. This type of argument usually takes place after the filing of a written objection.

Even if there was no objection, the judge might have questions regarding the plan. While some issues involve complex legal principals, the majority of objections revolve around how much a creditor should get paid. Most judges refrain from deciding the outcome at the first hearing so that the parties have more time to settle the matter. If a settlement cannot be reached, the judge might hold an evidentiary hearing for the parties to present evidence and argue their positions, or just decide the matter.

Do I Have To Attend The Confirmation Hearing?

Whether you’ll be required to go will depend on the judge and practices of your local court. In many districts, your appearance won’t 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 to answer questions. 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.

When Will the Confirmation Hearing Take Place?

It depends. Some courts automatically schedule a confirmation hearing a few hours after the mandatory meeting of creditors while others don’t schedule it until weeks later. However, a confirmation hearing should take place within 45 days of the meeting of creditors.

(To learn more about Chapter 13 bankruptcy procedures, see Chapter 13 Bankruptcy.)

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