Filing for bankruptcy is a life-altering decision, and navigating the process can feel overwhelming. One critical part of the Chapter 13 bankruptcy process is the confirmation hearing, a step that plays a crucial role in determining the success of your bankruptcy plan. But what exactly does confirmation mean, and how does it fit into your case? Let’s break it down.
In the context of Chapter 13 bankruptcy, the confirmation hearing is where the court will determine whether your proposed bankruptcy repayment plan is acceptable. This hearing is important because it's when objections, issues, or concerns about your case are addressed, and the court will either approve or reject your plan.
The hearing happens after your 341 Meeting of Creditors, which typically takes place 30-35 days after filing. The confirmation hearing itself must occur no earlier than 20 days and no later than 45 days after the 341 meeting (as per 11 USC 1324).
At the confirmation hearing, the bankruptcy trustee, creditors, and sometimes the judge, will review your bankruptcy plan, schedules, and financial disclosures. Creditors or the trustee may raise concerns or objections to your proposed plan. Common objections include issues with the value of your assets, the amount being paid to creditors, or your ability to make the proposed payments.
Under 11 USC 1325, the bankruptcy court will evaluate your plan based on several criteria to determine if it should be confirmed. Some of the most critical provisions include:
Good Faith Requirement (1325(a)(3))
Your bankruptcy plan must be proposed in good faith, meaning it is not fraudulent or abusive. The court will assess whether you’re attempting to avoid debts in an unfair or dishonest way.
Value of Property (1325(a)(4))
Your Chapter 13 plan must pay your creditors at least as much as they would receive in a Chapter 7 liquidation. This is known as the “best interests of creditors” test, ensuring that non-exempt assets are liquidated in Chapter 7, and creditors receive equivalent value.
Secured Creditors (1325(a)(5))
Secured creditors (those with a lien on your property, like your mortgage lender or car lender) must either accept the repayment plan or be compensated with equal value. Issues often arise regarding vehicle loans, mortgages, or other secured debts where the value of collateral is disputed.
Mortgage creditors may object to the Chapter 13 plan if there are discrepancies in the mortgage balance, property taxes, or insurance. Many times, an escrow shortfall or a miscalculation of the loan balance can lead to a conflict. For instance, if the property taxes or insurance escrow increases, the trustee might need to adjust your plan to reflect those new costs.
One of the advantages of Chapter 13 bankruptcy is the ability to “cram down” certain debts. If you purchased a vehicle within 910 days (about 2.5 years) before filing bankruptcy, you may be able to reduce the amount owed on the vehicle to its current value rather than the full loan balance. However, disagreements often arise over the vehicle's value, and creditors may argue for a higher valuation, leading to a need for appraisals or hearings.
You must show that you are current on any domestic support obligations, such as child support or alimony, since the filing of the bankruptcy. The bankruptcy court will require documentation proving you’re up to date on these payments. Failure to provide this evidence can prevent your plan from being confirmed.
Another key requirement is ensuring all required tax returns are filed for the last four years. If you fail to file taxes or there are outstanding filings, the court may delay or dismiss your case. In some cases, the IRS will file a proof of claim that can complicate the process.
The Hanging Paragraph (found in 11 USC 1325(a)) is a provision that impacts vehicles and certain personal property purchased within a specific timeframe. If you purchased a car or personal property like furniture or electronics in the last 910 days, the creditor may object to the value of the property or try to force a higher payment based on their valuation methods. However, there are rules about how much of the loan can be crammed down depending on how old the debt is, and whether the item is for personal or business use.
In 2005, Congress introduced the means test to prevent high-income earners from filing for Chapter 7 bankruptcy, which involves the liquidation of assets. The means test looks at your current income over the past six months and compares it to the median income in your state. If your income is above the median, you may still be eligible for Chapter 13, but the bankruptcy court will require you to pay a certain portion of your unsecured debt.
If the court confirms your Chapter 13 plan, the repayment process begins, and you will start making monthly payments to the bankruptcy trustee, who will distribute the funds to your creditors. After completing the required plan payments (usually 3-5 years), the remaining unsecured debts may be discharged, giving you a fresh financial start.
However, remember that the road to confirmation can be filled with complexities. It's important to work with an experienced bankruptcy attorney who can guide you through the process, address objections, and ensure that your Chapter 13 plan meets all the requirements of the Bankruptcy Code.
If you’re considering Chapter 13 bankruptcy or have questions about the confirmation process, feel free to reach out to us. We’re here to help you navigate the process and get your financial life back on track.
Have questions about Chapter 13 bankruptcy or need legal advice? Contact our office today for a free consultation with an experienced bankruptcy attorney.
© 2025 Wegner Law PLLC
| View Our Disclaimer | Privacy Policy
Law Firm Website Design by The Modern Firm