What Is A Chapter 13 Confirmation Hearing?
If a person is struggling with overwhelming debt, they can file for bankruptcy and get relief. Usually, people file either a Chapter 7 or Chapter 13 bankruptcy. A Chapter 7 bankruptcy allows a debtor to have all or most of their debts discharged by the bankruptcy court. On the other hand, filing for a Chapter 13 bankruptcy lets a debtor rearrange their debts and pay them over some time, usually over a period of three to five years. However, before a debtor can be allowed to pay their debts over time, the Court must approve the Debtor’s repayment plan in a confirmation hearing. This article discusses what a confirmation hearing is and other crucial information.
What Is a Chapter 13 Confirmation Hearing?
When you file for a Chapter 13 bankruptcy, your repayment plan is not approved automatically. The bankruptcy judge must approve your repayment plan. This happens at the Confirmation Hearing. Usually, this Hearing will be scheduled within 45 days of the 341 meeting of creditors. The primary purpose of the confirmation hearing is for the judge to decide if;
- your plan is practicable,
- you will likely be able to make the plan payments,
- you filed your plan in good faith, and
- unsecured creditors will receive as much or more payment as they would have had you filed Chapter 7 bankruptcy.
If you are planning to file a Chapter 13 bankruptcy, it is vital that you understand how big a step confirmation is in the Chapter 13 bankruptcy process. When your repayment plan is confirmed by the bankruptcy judge, it means it has been formally approved, and your creditors are bound by its terms. It means that as long as you comply with your repayment plan, creditors must accept the terms of your plan. Additionally, once your repayment plan is confirmed, you will get certain privileges back. For example, you can begin rebuilding your credit after your repayment plan is approved.
Objections to the Repayment Plan
You should note that any interested party can object to your Chapter 13 repayment plan. If an interested party does not like a provision of the repayment plan, they can file a written “Objection” with the Court. After an objection is filed, the judge will consider the Objection at the Confirmation Hearing.
So, why would someone object to your Chapter 13 repayment plan? There are several reasons why an interested party would file an objection. For example, the Chapter 13 bankruptcy trustee might file an objection if they feel your creditors are not getting adequate repayment. If the bankruptcy Trustee feels you should be paying your creditors more, the Trustee might object to the plan. A secured creditor may object based upon its proposed payments inside the repayment plan. However, oftentimes, an Objection can be addressed through negotiation and filing an Amended Repayment Plan. It is common for a Debtor to file one Amended Repayment Plan in their Chapter 13 Case before the Confirmation Hearing.
If you cannot negotiate a resolution of an Objection, then there will be an evidentiary Hearing before the Bankruptcy Judge to determine whether to approve the Debtor’s Proposed Repayment Plan and whether to sustain or overrule a creditor’s objection. It is important to have experienced counsel who has undertaken litigating Confirmation Hearings.
What if Your Repayment Plan Is Not Confirmed?
If your Chapter 13 repayment plan is not confirmed, a number of things can happen. For example, you may be allowed to file a modified plan at a later date. You may also convert your case to a Chapter 7 case. Lastly, although rare, your case may be dismissed.
Contact a Pennsylvania Bankruptcy Attorney Today
If you need help filing either a Chapter 7 or Chapter 13 bankruptcy, contact an experienced and dedicated Lehighton & Carbon County bankruptcy attorney at Adam R. Weaver, Esq.