The Disposable Income test requires that all of your household’s monthly disposable income is be paid to the Chapter 13 Trustee. There is one exception to this rule that rarely applies. Note also that your total plan payments can never be less than the Chapter 13 Liquidation Analysis.
The Feasibility Test requires that you must be able to afford your plan payments AND continue to pay for your reasonable and necessary household expenses. Simply put, you may have grand goals in the chapter 13 case, but if the court is not convinced you can afford it, your Chapter 13 Plan will not be confirmed.
The Confirmation Hearing is the hearing in Bankruptcy Court that is required in order for the Court to approve (“confirm”) your proposed Chapter 13 plan. Once the plan is confirmed, you and all of your creditors are required to abide by the plan. The Confirmation Hearing is usually scheduled about 2 months after your case is filed. You are required to attend this hearing unless your Chapter 13 Plan is uncontested and your appearance is waived. Generally, we will not know if your appearance is waived until a day or two before the confirmation hearing, so you should plan to attend. The confirmation hearing is also very often rescheduled when there are objections to provide the opportunity to resolve the objections or revise the Plan.
Chapter 13 Plan is the repayment plan that you present for approval. Chapter 13 Plans
must be between 3 and 5 years in length.
All bankruptcy papers are required to provide complete disclosure, be as accurate as possible, and are signed under penalty of perjury. Willful failure to disclose assets, income, debts, expenses, and previous transactions is dangerous. It can lead not only to a denial of your discharge, but is also a crime under the Federal penal code and could lead to fines, jail time, or both.
Monthly Chapter 13 Payments will be by wage deduction. If you are employed, your employer will receive a court order requiring a deduction from your paycheck, and your employer will actually make the monthly payment. BUT THIS ORDER won’t be issued until AFTER the plan is confirmed. BETWEEN DATE OF FILING AND DATE OF CONFIRMATION, YOU ARE REQUIRED TO MAKE MONTHLY PAYMENTS DIRECTLY TO THE TRUSTEE. YOUR FIRST PAYMENT IS DUE 30 DAYS AFTER YOUR CASE IS FILED, and then the due dates are the same day each month during the entire term of your Plan. Some trustees have electronic pay systems in place. We will advise you in this regard.
Reaffirmation Agreements are bankruptcy contracts whereby you agree that a particular debt is permitted to survive your bankruptcy case and not be discharged, and the creditor agrees to let you keep a piece of collateral. We frown on these agreements as they are generally not in your best interest. With very few exceptions, most creditors will permit you to retain collateral so long as you make post-petition payments. On the other hand, if you and the creditor submit a reaffirmation agreement to the court, and the judge approves it, then you are legally obligated for the money on a debt that would otherwise be discharged in your case. If sometime after your case is over, you discover that you cannot afford the payment or if there is some other catastrophe and the car or home are repossessed, you will still be obligated for the cash difference between the auction price and the balance on the debt. We will present you with all reaffirmation offers we receive, but our advice will likely be to reject the offer.