25 Sep The Chapter 13 Process (Part 4)
OK, you’ve produced all the documents you needed, the petition, schedules, statement of financial affairs has been filed, and you’ve attended the mandatory 341 hearing – now what? The next step is to get the plan “confirmed.”
That means having the plan approved by the local bankruptcy judge. In most districts, this is pretty automatic if the trustee didn’t have any problem with the plan at the 341 hearing. The court usually schedules a confirmation hearing and an order is issued.
But if the trustee does have a concern with the plan or a creditor objects, or the judge doesn’t like what she sees, what then? Usually, what happens is the judge will issue an order refusing to confirm the plan and explaining why. Often a plan won’t work because the debtors lack the wherewithal to make the monthly payments, or the amounts listed to be paid aren’t enough under the law. Both of those scenarios are quite common.
Should that happen, the lawyer will review the problem with the trustee or his or her staff, and meet with the debtors to find a way to fix the plan. Maybe it means making payments for longer than originally intended, or maybe it means adjusting a class of payments to pay a little more over the course of the plan. But, often a clever attorney will find a way to make it work within the law. Once re-written, a plan can be submitted to the court for review at a noticed hearing. Hopefully then it will be confirmed.
In Part 5 we will look at some common types of plans.
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