When a debtor files for Chapter 13 bankruptcy relief, he or she must file a Chapter 13 plan. A Chapter 13 plan is a written document that essentially is a roadmap for the entire case. It is the basis for the administration of the case. It is what the Chapter 13 Trustee, the Debtor, the court, and all creditors will adhere to while the case is pending. The Chapter 13 plan must be reviewed and recommended for confirmation by the trustee. The Chapter 13 plan must then be approved by the bankruptcy court. That whole process is called confirmation. A case can be recommended for confirmation by the Chapter 13 trustee as early as the initial meeting of creditors if everything is progressing normally in the case. That meeting of creditors is usually held about 45 days after the case is filed. David A. Arietta puts in a lot of time on the front end of a case so that his clients’ cases are usually confirmed shortly after the initial meeting of creditors date. The chapter 13 trustee’s office usually identifies issues early enough so that the issues can be resolved and cases made ready for confirmation by the meeting of creditors’ date.
In some cases, a creditor or the chapter 13 trustee may file an objection to confirmation which means that the plan cannot be confirmed until the issues are resolved. If the issues are not timely resolved, the matter will be heard in front of a bankruptcy judge at a confirmation hearing. The judge may require legal argument or additional evidence and can make a ruling in favor or against confirmation. Once the objection is resolved, the judge will sign a confirmation order. In any event, a case cannot move forward without the debtor’s Chapter 13 plan being confirmed at some point. If a plan cannot be confirmed, the case will be dismissed. Dismissal will result in the end of the automatic stay and creditors can again collect their debts against the debtor. If the case is dismissed prior to confirmation, the Chapter 13 trustee will return any funds collected to the debtor.
Once the case is confirmed, the chapter 13 trustee will distribute funds received under the plan. Trustee distributions are usually once a month. If a court declines to confirm the plan, a debtor may file a modified plan and try again. Another option is that a debtor can convert the case to liquidation case under Chapter 7. Conversion is used sparingly and only in those circumstances where a debtor has no non-exempt property.
Call David A. Arietta at (925) 472-8000 to go over questions about Chapter 13.