What Is The Chapter 13 Plan Confirmation Process?

The Chapter 13 plan confirmation process is a critical phase in the Chapter 13 bankruptcy procedure, where the bankruptcy court evaluates and decides whether to approve the debtor’s proposed repayment plan. This process involves several steps, from the submission of the plan to the court’s final decision. Here’s a detailed look at how the Chapter 13 plan confirmation process works:

1. Preparation and Submission of the Repayment Plan

After filing for Chapter 13 bankruptcy, the debtor must submit a proposed repayment plan to the bankruptcy court. This plan outlines how the debtor intends to repay creditors over a three to five-year period. The plan must account for monthly living expenses and allocate the debtor’s disposable income towards debt repayment. It prioritizes debt payments, ensuring that priority debts (like taxes and child support) are paid in full and proposes terms for paying secured and unsecured debts.

2. Credit Counseling

Before the plan can be confirmed, the debtor must complete a credit counseling course from an approved agency. This requirement aims to ensure that the debtor is fully informed about the bankruptcy process, the implications of a Chapter 13 filing, and potential debt repayment strategies.

3. 341 Meeting of Creditors

Before the confirmation hearing, a meeting of creditors (341 meeting) is held, where creditors and the appointed bankruptcy trustee can ask the debtor questions about their finances and the proposed repayment plan. While this meeting primarily serves for information gathering, issues raised here can influence the plan’s confirmation.

4. Review by the Bankruptcy Trustee

The bankruptcy trustee reviews the proposed plan to ensure it complies with bankruptcy laws and is feasible based on the debtor’s financial situation. The trustee may object to the plan if it fails to meet legal requirements, such as not proposing to pay all disposable income into the plan for the required duration.

5. Objections to the Plan

Creditors have the opportunity to review the plan and file objections if they believe the plan treats them unfairly or violates bankruptcy laws. Common objections include disputes over the valuation of assets, the amount of disposable income, or the proposed repayment of debts.

6. The Confirmation Hearing

The bankruptcy court holds a confirmation hearing to decide whether to approve the plan. During this hearing, the court considers any objections from the trustee or creditors and evaluates whether the plan meets all legal requirements, including:

• Feasibility: Whether the debtor can afford the proposed payments.
• Best interests of creditors: Ensuring the plan pays unsecured creditors at least as much as they would receive under a Chapter 7 liquidation.
• Best efforts: Confirming the plan commits all of the debtor’s projected disposable income for the applicable commitment period.

7. Court Decision

If the court finds the plan meets all requirements and overcomes any objections, it will confirm the plan. If the plan is not confirmed, the debtor may need to amend the plan to address the court’s concerns or, in some cases, consider converting to Chapter 7 bankruptcy or facing dismissal of their Chapter 13 case.

8. Implementation of the Plan

Once confirmed, the debtor begins making payments according to the plan’s terms. The trustee distributes these payments to creditors. Successful completion of the plan payments typically leads to a discharge of the remaining dischargeable debts.

9. Modifications to the Plan

After confirmation, the debtor can request modifications to the plan if their financial situation changes significantly. However, these modifications must also be approved by the court.

The Chapter 13 plan confirmation process is designed to ensure that the repayment plan is fair, feasible, and complies with bankruptcy laws. It provides a structured way for debtors to manage their debts, offering a path towards financial stability while retaining their assets. Given the complexities involved, debtors often benefit from the guidance of an experienced bankruptcy attorney to navigate the process successfully.