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.)
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?
Here are common things that might elicit an objection in a bankruptcy case:
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).
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:
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.)
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:
(For more information, read Objections to the Bankruptcy Discharge.)
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.
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.
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.)