You may already know that if you file for Chapter 13 bankruptcy, you’ll need to create a debt repayment plan. That plan needs to be filed with the bankruptcy court within 15 days of your bankruptcy petition. Chapter 13 repayment plans are either three or five years, depending on whether your income is above or below the median income for the state.
The payments in the repayment plan are actually made to your bankruptcy trustee. That person then distributes the money to your creditors based on the terms of your plan. The plan must take in to account the various types of claims: priority, secured and unsecured.
The repayment plan has to be approved or “confirmed” by a bankruptcy judge. That is done in a confirmation hearing. The judge will review the plan to make sure it complies with the Bankruptcy Code and that it seems feasible.
What does the judge consider?
The judge will hold a confirmation hearing within 45 days of the meeting of creditors. In this hearing, the judge will make sure that the repayment plan meets the following requirements:
- It complies with the rules in the Bankruptcy Code.
- It seems practical and feasible.
- It was filed in good faith.
- Unsecured creditors (credit card companies, for example) will receive at least as much as they would have in a Chapter 7 bankruptcy.
During the confirmation hearing, creditors are allowed to appear and raise objections if they have them. So can the trustee.
If you have an attorney representing you in the bankruptcy, you likely won’t have to attend this hearing as long as your attorney is there on your behalf. That’s up to you and your attorney. If you have a bankruptcy attorney, it’s wise to rely on them for guidance throughout the process.