You almost never attend the “confirmation hearing,” it may take only a few seconds, but it’s crucial because there your plan gets airborne.
The Chapter 13 Plan
As we said in the last blog about the “meeting of creditors,” a Chapter 13 “adjustment of debts” case is all about “the plan.” The plan is a roadmap, proposed by you and your attorney, which outlines who you will pay, how much, and when. It’s based on a detailed set of bankruptcy laws which rather tightly govern your rights as to your creditors, but also provide some measure of flexibility. The Chapter 13 trustee reviews the plan carefully, and it is the main topic of conversation at the “meeting of creditors” presided over by the trustee. He or she is entitled to object to it, as are any of your creditors, all within the guidance of the applicable laws. Any objections are usually resolved by negotiation between your attorney and the trustee and/or the creditors’ attorneys, often resulting in small or not so small changes to the plan.
All this effort culminates at the confirmation hearing, which takes place about month or so after the meeting of creditors. If the case goes as it should, it’s there that the bankruptcy judge formally approves the plan, sometimes after resolving any lingering objections.
Your Attendance
As emphasized in the last blog, you must attend the meeting of creditors. That meeting itself generally takes no more than about 10 minutes, but it cannot happen without you. In contrast, you don’t attend the confirmation hearing. You could attend—it’s a court hearing open to the public—but there would almost never be any point to doing so, except to observe what happens there.
The Simple Confirmation Hearing
The goal of the hearing is to get the judge to approve the plan, and to do so by signing a formal document called the Order Confirming Plan. This is usually prepared in advance by your attorney, and signed off by the trustee. At the most straightforward confirmation hearing, any objections raised by the trustee and/or by any creditors have been fully resolved before the hearing. So the trustee reports that fact to the judge, who reviews and signs the Order Confirming Plan indicating his or her formal approval. At that point your plan, as originally proposed or with any agreed upon changes, becomes fully effective. It, together with the Order Confirming Plan, governs your case from then on.
The Not-So-Simple Confirmation Hearing
However, for numerous reasons a plan may not be ready for the judge’s approval at the start of the confirmation hearing. The trustee may be objecting to the appropriateness of an expense in your budget. There may be an unresolved dispute with a secured creditor about the value of its collateral, resulting in a disagreement about how much the creditor is entitled to be paid. Or an unexpected creditor could raise an objection for the first time at the hearing itself which cannot immediately be resolved. (Creditors usually raise any objections well before the hearing—which takes place about two months after your case is filed—but their deadline to do so is at the hearing.)
The judge can sometimes make a ruling at the confirmation hearing, resolving whatever is standing in the way of court approval. Then the plan could still get confirmed, either right at the hearing or after an amended Order Confirming Plan is submitted incorporating the judge’s ruling.
If the judge cannot resolve the problem in the few minutes allotted for the hearing, he or she will decide what should happen next. More time may be given for the debtor and objecting trustee or creditor to settle a matter. If so, usually the judge sets the case over for an “adjourned confirmation hearing,” usually a few weeks later, the length of time depending how long the judge believes is needed to resolve the dispute. If it is indeed resolved in the interim, then the plan may be amended as needed, and the Order Confirming Plan prepared referencing the resolved dispute. Before the scheduled adjourned confirmation hearing, the trustee signs off on the Order, and at the adjourned confirmation hearing the judge signs it, formally approving the amended plan.
Finally, sometimes the disputing parties are simply not able to settle their dispute, requiring the judge to adjudicate it. That would likely happen in a separate proceeding, with both sides making their arguments, and may even require a trial. After the judge’s decision, the plan will either get confirmed, or in some situations cannot be and instead the case is dismissed (thrown out).
The Majority of Chapter 13 Cases…
Most Chapter 13 plans that are prepared carefully, and in which the debtors are doing what their plan states that they will, do get confirmed, as originally proposed or as adjusted to settle any objection(s). In most bankruptcy courts the majority of such plans are confirmed at the initial confirmation hearing, or at least at the first adjourned one.