If you file for Chapter 13 bankruptcy, the court will hold a confirmation hearing. This hearing is central to your Chapter 13 case because it is where the court decides whether to approve (or confirm) your proposed repayment plan. Once your plan is confirmed, your obligations going forward are reset and your creditors must accept your payments in satisfaction of their claims.
(To learn more about Chapter 13 bankruptcy and the repayment plan, visit our Chapter 13 Bankruptcy Repayment Plan topic page.)
The confirmation hearing must take place within 45 days after the creditors meeting in your Chapter 13 case. The court will send out notice of the hearing in advance. It is not uncommon for the hearing to be continued one or more times if there are pending matters before the court which have to be decided before the court can confirm your plan. Depending on your plan, the confirmation hearing may need to be continued until the deadline for creditors to file claims in your case has passed.
Generally, you or your attorney must attend on the scheduled date to request that the hearing be continued. Each court has its own procedures. You may be able to find out more about the procedures in your area by checking the court website or the website for any standing Chapter 13 trustees in your area.
In many cases, only attorneys attend the confirmation hearing; this can vary by court. In addition, you may have to attend if other matters related to confirmation will be heard at the same time or if the judge requires it. Creditors generally only attend the hearing through their attorney and only if there is a related matter pending which involves their particular claim or if they are objecting to your plan. If you are representing yourself, you must attend the confirmation hearing.
Chapter 13 bankruptcy has become very complex. A lot of different factors are involved. The papers you file with the court must show that you are using all of your disposable income (as calculated under the bankruptcy laws) to fund your plan. The length of your plan must be appropriate for your situation (three or five years as determined by the bankruptcy laws), and you must be paying creditors by classification (secured, unsecured, and priority) at least as much as is required by the bankruptcy laws. (For details on these plan requirements, visit our Chapter 13 Repayment Plan topic area.)
In large part, the court relies on the Chapter 13 trustee to perform the case analysis and bring to the court's attention any defects in your plan and your calculations. The trustee does this by objecting to your plan. Creditors may also object if they feel that your plan does not properly deal with their claims. Objections must be filed before the confirmation hearing to give you some time to prepare. In most cases, the trustee will have communicated any concerns to you or your attorney prior to filing a formal objection so that you have time to work on a resolution.
If you are not able to reach agreement, the court may be able to determine some issues after hearing each party's concerns and considering the law. With other issues, the court may require that evidence, in the form of testimony, documents, or affidavits be presented.
Most objections to confirmation are resolved through agreement. Depending on the situation, the case may still need to go before the judge to get a court order finalizing the agreement. If the parties can't agree, the court will make a decision on the issue. The outcome of the confirmation hearing can vary depending on the circumstances. Below are the typical outcomes.
Your plan is confirmed. If there are no problems with your plan and no parties object, or any objections are determined in your favor, your plan is confirmed. Once this happens, you and your creditors are bound by the terms of your plan. As long as you comply with your plan, creditors have to accept the terms in payment of their claims.
The confirmation hearing is continued. The court may do this to allow you to finish dealing with matters affecting confirmation, have more time to work out agreements with your creditors, or amend your plan to correct errors or resolve objections. It is not unusual for Chapter 13 confirmation hearings to be continued more than once as long as the court is convinced that you are using the time to resolve any problems and not just to delay the process.
Your case is dismissed or converted to Chapter 7. If you are not making your payments under the proposed plan, do not have sufficient income to realistically fund the plan, or it otherwise becomes clear to the court that you cannot propose a plan which meets the requirements of the law, the court can dismiss your case or convert it to a Chapter 7. In Chapter 13, in most circumstances, you have the right to dismiss your case. As a result, the court will generally dismiss the case if you do not request that it be converted to a Chapter 7.
The court must consider objections to confirmation at the confirmation hearing. Other than that, court procedures vary on the matters that will be heard at the same time as the confirmation hearing. The court may consider whether or not to require your Chapter 13 payment be deducted directly from your paycheck. Objections to creditor claims or motions for cram down and to avoid or strip liens on your property could be heard at the same time but, usually, courts require these matters to be determined before the date for the confirmation hearing.