The Chapter 13 Bankruptcy Confirmation Hearing
You’ve filed your chapter 13 bankruptcy paperwork and submitted your schedules and payment plan. The meeting of creditors is completed and you’ve answered the trustee’s questions. The next step in the process is your confirmation hearing. In some courts, the confirmation hearing will happen on the same day as the meeting of creditors. In other cases, the confirmation hearing will occur within the next 45 days, depending on the circumstances and the practices of the particular court where your hearing is held.
At a minimum, the court must give at least 28 days notice of to everyone involved in your bankruptcy case. The hearing provides the court an opportunity to listen to any objectionsto your plan from your creditors or from the trustee. The court will also use the hearing to decide if the plan you’ve proposed is feasible. Sometimes there will be disputes as to the value of your property and these will be brought up at the hearing as well.
It is important to remember that when you hire us as your attorneys in your chapter 13 bankruptcy, our goal is to resolve any disputes prior to getting to the confirmation hearing. Because we have decades of experience handling bankruptcy cases in Arizona, we can anticipate areas of concern in your case before it goes to the confirmation hearing.
If for some reason your plan is not confirmed by the court, you will normally have the opportunity to modify the plan. Confirmation by the court creates a legally binding agreement between you and your creditors. You and your creditors must abide by the terms of the plan. If you remember from our earlier article, you must begin making payment plans within 30 days of filing for chapter 13 bankruptcy. Once your plan is confirmed, the trustee in your case will begin making payments to your creditors. Once you complete the plan successfully, you will receive a discharge.
Confirmation of your plan may or may not happen at the hearing. Much of that depends on your case and the schedule of the court that handles it. If there are issues that need to be settled after the hearing, then the judge may schedule another hearing.
Modifying Your Chapter 13 Plan
It is not unusual for individuals under chapter 13 to modify their plan. Emergencies, a change in income, or other circumstances might mean you need to make changes in the original plan your proposed when you filed.If you need to make changes in your plan before the plan is finalized and confirmed by the court, then you propose the changes to the trustee. Sometimes you may need to change the plan after it is confirmed. Unless your proposed changes will impact your creditors they cannot object to the changes. The modified plan must meet all of the requirements of a chapter 13 bankruptcy.
If you need to incur a debt or need credit during the plan period this may be possible as long as you receive permission from the trustee. Under most circumstances, you pay for it outside of the plan. For example, let’s say that your car breaks down and you need credit to pay for the car repairs. The company offering you credit must get permission from the trustee. It is possible for the debt to be paid through the plan, only if the plan provides for it, both you and the creditor agree to it, and you are able to make the payments. Remember that each case can present unique circumstances and we are offering general information here.
Because modifications can be complex and it is common for circumstances to change over the course of the three to five year chapter 13 bankruptcy plan, we recommend that you hire knowledgeable attorneys to handle your case. With our decades of experience doing bankruptcy in Tucson and Phoenix, we know the specific procedures used by bankruptcy courts in Arizona.
If your income changes during the plan period, a creditor can ask the court to modify your plan. This will happen most often if your income increases and you are able to make larger payments than your original plan proposed. If this occurs, it would be important to work with us to object to the modification. Objecting to the modification will help to ensure that the court holds a hearing where we can represent your interests to the judge.
What If You Are Unable to Complete Your Chapter 13 Plan?
There are times when job loss or some other unavoidable circumstances will mean you cannot complete your chapter 13 plan. You may not feel there are any options when that happens, but in working closely with us, as your attorneys, we can help you choose the best option when you are faced with these difficulties. The bankruptcy laws allow for four possible choices when you cannot complete your chapter 13 plan. They are dismissal, conversion to a chapter 7 bankruptcy, modifying the plan, or requesting a hardship discharge. Let’s start with the hardship discharge, as often this is the most desirable outcome when you cannot complete the plan.
The hardship discharge is an option when there are circumstances beyond your control. Bankruptcy laws refer to these as circumstances for which you are not “justly accountable.” The hardship discharge may be requested anytime after your plan is finalized by the court. One requirement for the court to grant the hardship discharge is that your unsecured creditors (such as credit companies, doctors, or hospitals) must have been already paid as much as they would have been paid if you had filed a chapter 7 bankruptcy.So the hardship discharge may depend on how long you have been paying into the plan. The hardship discharge will only be granted if modification is not possible.
Modifying the Plan
Although we discuss this in more detail in another article, it is possible to modify your plan to deal with unexpected circumstances that come up during the three to five year payment period in your chapter 13 bankruptcy.
Conversion to Chapter 7
You always have the right to convert your chapter 13 to a chapter 7 bankruptcy. You do not have to show hardship to convert to chapter 7. When you convert, you must submit some new paperwork (schedules) and you must also submit a statement indicating what you plan to do with property that was used to secure a loan.
In some circumstances, dismissing your chapter 13 bankruptcy may be the best choice. Just as you always have the right to convert to chapter 7 bankruptcy, you may request a dismissal unless the chapter 13 was converted from another bankruptcy chapter. When you request a dismissal, it is referred to as a voluntary dismissal. It is possible for the court to order a dismissal of your bankruptcy as well. This would be an involuntary dismissal.
Remember that our office offers a free consultation to discuss your financial situation and determine whether bankruptcy is the right option for you. We will walk you through the differences between chapter 7 and chapter 13 and we make sure you understand all of your rights and responsibilities in the bankruptcy process. Our offices in Phoenix and Tucson are staffed with experienced bankruptcy attorneys. To set up your free consultation, contact us today.