Understanding Chapter 13 Bankruptcy: Confirmation Hearing and Key Points
If you didn’t pass the means test, you most likely have to file Chapter 13 bankruptcy. Chapter 13 is different from Chapter 7 in a few aspects, including having the confirmation hearing where the judge decides if your proposed payment plan will be approved. In this blog, I’ll discuss the key parts of the confirmation hearing.
Updated on April 12, 2025.
Key Points:
- What to expect when you appear at the Chapter 13 confirmation hearing.
- What happens if creditors or the bankruptcy trustee object to the proposed plan?
- The role of the bankruptcy judge and the confirmation hearing.
Chapter 13 Bankruptcy versus Chapter 7 Bankruptcy
There could be several reasons why Chapter 13 bankruptcy should be filed. One reason is to keep nonexempt assets or assets that are not protected. Exemptions vary per state. Here’s how exemptions work.
Suppose the motor vehicle exemption in your state is $1,000. If your car is worth $25,000 and you owe $15,000, you have $10,000 in equity. If you subtract $1,000 from the $10,000, there is $9,000 that is nonexempt or unprotected. With Chapter 13 bankruptcy, the nonexempt amount would be paid back over the length of the plan, which is three to five years.
The means test is another reason why Chapter 13 bankruptcy might be filed. The means test was created when Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005. The purpose of BAPCPA was to have more debtors file Chapter 13 instead of Chapter 7.
The means test averages the last six months of your income. If your six-month average exceeds the state average, you might have to file Chapter 13 because your income is too high.
However, even if you pass the means test, Chapter 13 might still be required. That’s because your monthly income versus expenses will be analyzed. If there is sufficient disposable income, Chapter 13 might be needed.
For example, suppose you are substantially below the means test, but after comparing income to expenses, there is $400 left in disposable income. Chapter 13 would be required in that example.
The final reason Chapter 13 might be filed is to prevent losing secured assets like your car or home. With Chapter 13 bankruptcy, missed payments on car loans or mortgage payments (arrears) can be paid back through the bankruptcy plan. So, it’s common for debtors to file Chapter 13 to avoid a car repossession or foreclosure.
For example, if your mortgage is $1,000 monthly and you are six months behind, the arrears are $6,000. The $6,000 is spread out through the plan. However, the regular ongoing $1,000 monthly mortgage payments must also continue. So it’s the regular payment plus the arrears payment. For this reason, Chapter 13 is known as a “wage earner’s plan,” meaning you must have sufficient income to qualify.
The Chapter 13 Bankruptcy Confirmation Hearing
The confirmation hearing is scheduled after the 341 meeting of creditors. Typically, thirty to forty days after. Judges are prohibited from attending the 341 hearing. However, at the confirmation hearing, the judge will decide if the proposed plan will be accepted.
The bankruptcy judge can approve, reject, or require changes to the proposed plan. Note that there is no confirmation hearing in Chapter 7 bankruptcy cases.
What Happens at the Bankruptcy Confirmation Hearing?
The standing trustee will also be present at the confirmation hearing. The confirmation hearing will take place in the judge’s courtroom. Note that cell phones are likely prohibited. So make sure to review the bankruptcy judge’s webpage for further information.
The Chapter 13 trustee will be critical at this stage because they can agree or object to the plan. If the trustee agrees, the judge will most likely accept the plan. If the trustee disagrees, the judge will allow quick oral arguments to decide whether to approve or confirm the plan.
When the Standing Trustee Objects to the Chapter 13 Plan
The Chapter 13 bankruptcy trustee’s job is to protect the bankruptcy estate. The trustee will review the plan and confirm that creditors are paid their fair share.
Another reason a bankruptcy trustee might object to the bankruptcy plan is that more could be paid into the plan. The opposite also applies. If there isn’t sufficient income to pay back creditors, the trustee will object and recommend dismissal.
Even though the bankruptcy judge ultimately decides on whether to approve the plan, it’s common for your bankruptcy lawyer to work with the trustee to submit a plan for approval. Trustees are financially motivated to approve the plan since they receive approximately ten percent of the plan amount. If you review the bankruptcy plan, you will see a section focusing on trustee fees.
What Happens if a Creditor Objects to the Chapter 13 Plan?
Objections are common, so there’s need to stress it. But why was the proposed plan objected to? There could be several reasons.
One common reason is that the creditor filed their proof of claim after the plan was submitted, so the wrong amount is listed. For example, your bankruptcy lawyer listed the debt with a credit card company at $4,000, but the updated amount is $4,100. The plan would be adjusted accordingly.
Like the bankruptcy trustee, creditors can object for the same reasons. For example, the expenses are inaccurate or too high. The more disposable income is available, the more the creditors receive in turn.
Also, the Chapter 7 liquidation test must be complied with. The liquidation test determines how much of the non-exempt assets get paid back into the plan. It’s based on a hypothetical Chapter 7 bankruptcy case.
For example, pretend you were filing a Chapter 7 bankruptcy. Based on the previous example, $9,000 was nonexempt and belonged to the bankruptcy estate. With the Chapter 7 liquidation test, that is the minimal amount that gets paid into the plan to unsecured creditors. Creditors may receive more, up to the amount owed. The amount received by unsecured creditors is based on a pro-rata share.
Most objections are resolved informally, meaning the bankruptcy lawyer negotiates directly with the creditor or the creditor’s attorney to reach an agreement.
What Happens if Your Plan Wasn’t Confirmed?
It is common for a proposed plan not to be approved at the first confirmation hearing. Usually, this is because of the reasons listed above, especially if there are multiple creditors and the debt amounts need to be listed correctly.
However, throughout this time, you still must pay into the bankruptcy plan, and then when the final plan is approved, your payment amounts are adjusted accordingly.
So, the fact that the plan was not accepted after several confirmation hearings does not mean your case will be affected negatively. Just make sure to continue making the plan payments until those figures are straightened out.
More importantly, even without confirmation, the automatic stay remains effective. Therefore, creditors won’t make harassing phone calls or be able to proceed with their case. This will prevent your wages from being garnished or a levy on your bank accounts.
Attending the Chapter 13 Confirmation Hearing
By the time the confirmation hearing is scheduled, you are close to having to make your second plan payment. Make sure your plan payment is timely to avoid a dismissal. Once your case is dismissed, permission is needed from the bankruptcy judge to set aside the dismissal and continue the case. This will cost you more money because additional fees must be paid to your bankruptcy lawyer.
If you have to attend the confirmation hearing, it depends. Every case, bankruptcy judge, and situation is unique. Some judges always want debtors present at the confirmation hearing; others do not. The fact that most judges now allow the confirmation hearings to be done remotely makes this easier for everyone involved.
Either way, confirm with your bankruptcy attorney since sometimes matters before the judge are routine, and your presence isn’t necessary. Sometimes, there are questions the bankruptcy judge prefers to ask you directly. However, if that happens, understand that this situation is not like what you would typically expect.
For example, we have all seen the aggressive cross-examination by opposing counsel in movies. That wouldn’t happen here. Generally, the bankruptcy judge may ask a few questions to understand your situation.
Another way of looking at this situation is that everyone involved wants the plan confirmed. For example, your attorney is likely getting paid their attorney’s fees through the plan. As mentioned before, the trustee receives ten percent of the plan amount.
Creditors also want the plan approved to receive their share versus Chapter 7 bankruptcy, where they will likely receive far less.
Of course, no one wants the bankruptcy plan confirmed more than you.
I wish you the best of luck with your bankruptcy case. I’ll meet you on the road to financial freedom.
Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon Books. To access my YouTube channel, click this link. Bankruptcy archives can be found via this link.
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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.
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