Bankruptcy Confirmation

Bankruptcy confirmation hearings are required when debtors file for protection under chapter 13 Also known as ‘reorganization’, this bankruptcy chapter requires debtors to submit a repayment plan to the judge. The confirmation hearing is required to determine if the repayment plan adheres to regulations set forth in the United States Bankruptcy Code.

The bankruptcy confirmation typically occurs within 45 days after the 341 creditors meeting. This meeting allows creditors to question the debtor regarding their ability to repay outstanding debts. Information is provided under oath. If the debtor provides falsified information they could potentially face jail time and are certain to have their bankruptcy request denied.

It is important to understand that chapter 13 enacted by Congress in 2005 have made filing for bankruptcy more difficult than in the past. Previously, debtors often filed chapter 7 in order to have all debts discharged. Today, most debtors do not qualify for chapter 7.

The Bankruptcy Abuse Prevention and Consumer Protection Act require debtors to undergo the ‘means’ test to determine if they qualify for chapter 7 bankruptcy. The means test compares debtors’ income to the median average of the state in which they reside. If debtors earn more than the average income level they are required to file Chapter 13 and establish a repayment plan.

Repayment generally extends over a period of three to five years. During this time debtors must contribute a large portion of disposable income toward outstanding debts. One unexpected financial setback can cause debtors to fail out of bankruptcy. If this occurs, debtors lose all protection from the court and creditors can commence with collection and foreclosure.

Filing bankrupcy can help debtors reduce financial burdens. However, it is imperative debtors have a thorough understanding of the ramifications involved. First and foremost, foreclosures and bankruptcy creates serious damage to credit ratings and remains on credit reports for as long as ten years.

If you are considering bankruptcy take time to look at bankruptcy alternatives such as credit counseling, debt consolidation or debt settlement.