What are the Chapter 13 First Meeting of Creditors and the Confirmation Hearing?

Chapter 13 bankruptcy cases differ from Chapter 7 bankruptcies in many ways.  While both have a mandatory Meeting of Creditors as required by 11 U.S.C. Section 341 (a.k.a.-The 341 Hearing), Chapter 13 cases will also have a SECOND hearing early in the case, called the “Confirmation Hearing”.

The term “341 Meeting of Creditors” is a misnomer.  In fact, it is a meeting with creditors, rather than a meeting of the creditors.  The presence of the Debtor at the hearing is mandatory and can only be excused with a Judge’s Order and on good cause.  This hearing must take place in order for the case to go forward.

The Confirmation Hearing is the time when your proposed Chapter 13 Plan of Reorganization, which explains to the Bankruptcy Court, Bankruptcy Trustee and Creditors how you intend to deal with your debts, either gets a “thumbs up” and is approved to become a Confirmed plan or gets rejected.  Statistically, 1 in every 3 Chapter 13 bankruptcy cases gets rejected at or before the Confirmation Hearing, which can result in you having to propose a new plan, your case being converted to Chapter 7 bankruptcy or dismissed. 

This is one reason why you should hire experienced counsel for Chapter 13 bankruptcy. To properly handle Chapter 13 cases in the Eastern District of Michigan, an attorney will absolutely need to be familiar with the requirements of the Local Bankruptcy Rules as well as the local practices of the Chapter 13 trustees and Bankruptcy Judges.  Every Judge and Trustee has different ideas, policies and procedures for how they want cases to proceed before them. Also, the Eastern District of Michigan has some of the most rigorous Chapter 13 confirmation procedures in the country.

Before the 341 Hearing

Before the 341 Hearing, the Trustee must be sent several documents pursuant to the Local Bankruptcy Rules.  These documents your 2 most recently filed income tax returns (with all accompanying attachments/documents) & pay advices for the last 6 months (in some instances, the Trustee at the hearing, or immediately after, might also want to see bank statements, vehicle titles, recorded real property information and other documents which must be “readily available”).  Our office will tell you what documents you need and when you need them. Without these documents sent to them in advance as required by the Local Rules, your Chapter 13 Trustee may choose to not hold the 341 Meeting and instead ask you to return after they receive the documents. In advance of the hearing, your attorney can expect the Chapter 13 Trustee’s office to send them a copy of the “341 Status Sheet”.  This is the Trustee’s internal document which indicates the initial concerns, issues and problems your case may have.  A day or two before the hearing, an efficient and experienced law firm will call you to make certain you received the Notice from the Bankruptcy Court and that you are aware of when the hearing will occur and that your attendance is mandatory. Your attorney should also spend time with you reviewing the 341 Status Sheet in order to properly prepare you for the 341 Meeting.  

Attending the 341 Meeting

We often advise our clients to arrive early to the First Meeting of Creditors so that you can observe a few hearings before yours is called. This might help settle your nerves and give you a sense of familiarity with the process. Most of the questioning in Chapter 13 cases comes from the Chapter 13 Trustee’s office.  They are seeking information necessary to the process, and information needed to ensure your Chapter 13 Plan can be approved by the Bankruptcy Court.  Creditors may also show up at the 341 hearings, and this is their opportunity to ask you questions.  Please note that due to certain restrictions as a result of COVID-19, all 341 Meetings are now conducted virtually, until further notice.   

After the 341 Hearing/ Before the Confirmation Hearing

After the 341 Hearing, we review the Trustee’s TRAC system (sometimes referred to as the 13Network) to double check whether payments are being made as required (your first Chapter 13 Plan payment is due 30 days after your case is filed) and whether your Chapter 13 Plan is presently “calculating” as feasible. An experienced attorney understands the workings of the TRAC system, making it significantly more likely your case runs smoothly.

Oftentimes it will be necessary to amend your Bankruptcy Schedules or the Chapter 13 Plan after the 341 Hearing. This is normal and does not mean that your case is in trouble or that your attorney did anything incorrectly. Written objections to the Debtor’s Chapter 13 Plans are normally due within 21 days of the date of the 341 Hearing.  Judges will often allow late-filed objections to be heard, however, and some issues (like plan infeasibility or poor payment history) can be raised at any time during the confirmation process. Objections to plans are very common and it does not mean that your case won’t be approved. We work diligently to resolve objections and try to make your case go as smoothly as possible.

The Confirmation Hearing

The Confirmation Hearing is to establish whether your filed Proposed Chapter 13 Plan will be approved. If all objections are resolved by this time, your plan will be approved.  If not, it might be necessary to argue unresolved objections in court. It might be necessary to adjourn your confirmation hearing for various reasons, including needing more time to resolve objections and other issues. Your case may not get approved at the first confirmation hearing and, if that happens, we will work to try to get your case in shape to be confirmed at the next hearing.  Ultimately, when the creditors, the Trustee and the Judge all give the “thumbs up” to your proposal, it becomes a Confirmed Chapter 13 Plan. This is the goal of a Chapter 13 case.

After the Confirmation Hearing

After Confirmation of the case, we send a letter to our clients, reminding them of their obligations and any changes that were made in their Plan or payments at the time of confirmation.  Your job is then to make sure that you comply with all terms of your confirmed plan, especially the terms regarding your payment obligation. If all goes as planned, then at the end of your case you will receive an order of discharge which will mean that your case was successfully completed.

An Experienced Bankruptcy Attorney Can Make all the Difference

Individuals who need to file a bankruptcy case often have not had much experience with the legal system and hiring an attorney. People often believe that if somebody has a law degree and they call themselves an attorney, they can handle your bankruptcy case as well as anyone could. Unfortunately, this is not true. Chapter 13 cases are very fact intensive and case-specific, meaning that each Chapter 13 case is unique and poses different hurdles.  An inexperienced attorney can greatly decrease the chances of your case being successful. Inexperienced attorneys can wind up costing you more money in the long run even though you hired them solely upon the basis of charging you a low fee. Often in life you get what you pay for, and this truth is no different when you are trying to decide which bankruptcy law firm to hire.

The information that we provided above is a general overview and small taste of the intricacies involved with properly representing a person in a Chapter 13 case. Not all law firms have the same level of experience as ours. Not all law firms take the same detailed steps that we do to increase the likelihood that your case will be successful.  Not very case goes smoothly because some cases are very complicated, or things happen in the case that raise complications.  An organized and efficiently run law firm can make your case go as smoothly as possible. You want an attorney in your corner who is experienced. Experience matters. Experience gets results. Results matter.