Common Post-Confirmation Issues in Chapter 13 Bankruptcy Cases

Chapter 13 bankruptcy cases are lengthy, and there are a number of steps in the process that result in these types of reorganization bankruptcies lasting for years. Most significantly, a debtor must have a repayment plan approved, and the terms of the repayment plan typically last three to five years under US bankruptcy law.

Once the plan is confirmed by the court, the debtor moves forward over that three to five year period with regular payments until the terms are completed. This phase of the bankruptcy case is usually described as “post-confirmation.” While this phase may go smoothly for many bankruptcy filers, a range of post-confirmation issues can arise. What issues should you consider, and what should you expect when post-confirmation matters do come up? Our West Palm Beach bankruptcy attorneys can say more.

What to Know About Repayment Plan Confirmation

 The terms of the repayment plan are based on the total of the bankruptcy filer’s secured and priority debts, the value of their assets and their income, and the available exemptions under the Florida Statutes. Certain debts must be repaid in full over the course of the repayment plan, while other debts may be repaid only partially or not at all, and may be eligible for discharge at the end of the Chapter 13 case (i.e., once the debtor has completed the terms of the repayment plan).

While the debtor typically begins making payments on the repayment plan almost immediately, a bankruptcy court must confirm the terms of the repayment plan. That confirmation process involves ensuring that secured and priority creditors are repaid, and that the terms of the plan are fair to the creditors in the case. Once the plan is confirmed, the debtor makes all of the regular payments for the three to five year period, and no changes occur to the terms of the plan until it is complete. However, post-confirmation issues can arise that can require a modification to the terms of the repayment plan, or conversion to another type of bankruptcy.

Possible Post-Confirmation Issues 

The debtor, trustee, or creditors can seek a modification of the payment plan in the post-confirmation phase as long as the terms of the repayment plan have not yet been completed. While a bankruptcy conversion from one chapter to another can in some cases be initiated by a creditor, it is usually the debtor who seeks a conversion from a Chapter 13 case to a Chapter 7 case, for example. The most common post-confirmation issues that arise include the following:

• Debtor’s disposable income decreases due to job loss, demotion, or other change in income;
• Debtor’s disposable income increases due to promotion, change of job, or other change in circumstances;
• Debtor’s assets increase significantly due to an inheritance or similar; or
• Debtor becomes disabled and unable to work.

Contact Our West Palm Beach Bankruptcy Attorney Today 

For any questions about Chapter 13 bankruptcy, including plan confirmation or potential post-confirmation issues, you should seek advice from one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller. Contact our firm today for assistance.

Source:

law.cornell.edu/uscode/text/11