Meeting of Creditors
The debtor must file a plan of repayment with the petition or with 15 days thereafter, unless extended by the court for cause. The chapter 13 plan must provide for the full payment of all claims entitled to priority under section 507 of the Bankruptcy Code (unless the holder of a particular claim agrees to different treatment of the claim); if the plan classifies claims, provide the same treatment of each claim within each class; and provide for the submission of such portion of the debtor’s future income to the supervision of the trustee as is necessary for the execution of the plan. Other plan provisions are permissive. Plans, which must be approved by the court, provide for payments of fixed amounts to the trustee on a regular basis, typically monthly. The trustee then distributes the funds to creditors accordingly to the term of the plan, which may offer creditors less than full payment on their claims. If the trustee or a creditor with an unsecured claim objects to confirmation of the plan, the debtor is obligated to pay the amount of the claim or commit to the proposed plan all projected “disposable income” during the period in which the plan is in effect. Disposable income is defined as income not reasonable necessary for the maintenance or support of the debtor or dependents. If the debtor operates a business, disposable income is defined as excluding those amounts which are necessary for the payment of ordinary operating expenses.

Within 30 days after the filing of the plan, even if the plan has not yet been approved by the court, the debtor must start making payments to the trustee.

A 341(a) “meeting of creditors” is held in every case, during which the debtor is examined under oath. It is usually held 20 to 50 days after the petition is filed. The debtor must attend this meeting, at which creditors may appear and ask questions regarding the debtor’s financial affairs and the proposed terms of the plan. If a husband and wife have file one joint petition, they both must attend the creditors’ meeting. The trustee also will attend this meeting and question the debtor on the same matters. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending.

If there are problems with the plan, they are typically resolved during or shortly after the creditors’ meeting. Generally, problems may be avoided if the petition and plan are complete and accurate and the trustee has been consulted prior to the meeting.

In a chapter 13 case, unsecured creditors who have claims against the debtor must file their claims with the court within 90 days after the first date set for the meeting of creditors. A governmental unit, however, may file a proof of claim until the expiration of 180 days from the date the case is filed.

After the meeting of creditors is concluded, the bankruptcy judge must determine at a confirmation hearing whether the plan is feasible and meets the standards for confirmation set forth in the Bankruptcy Code. Creditors, who will receive 25 days notice of a hearing, may appear and object to confirmation. While a variety of objections may be made, the most frequent ones are the payments offered under the plan are less than creditors would receive if the debtor’s assets were liquidated, or that the debtor’s plan does not commit all disposable income for the three-year period of the plan.

Within 30 days after the filing of the plan, even if the plan has not yet been approved by the Court, the debtor must start making payments to the trustee. If the plan is confirmed by the bankruptcy judge, the chapter 13 trustee commences distribution of the funds received in accordance with the plan “as soon as practicable.” If the plan is not confirmed, the debtor has a right to file a modified plan. The debtor also has a right to convert the case to chapter 7. If the plan or modified plan is not confirmed and the case is dismissed, the court may authorize the trustee to retain a specified amount for costs, but all other funds paid to the trustee are returned to the debtor.

On occasion, changed circumstances will affect a debtor’s ability to make plan payment, a creditor may object or threaten to object to a plan, or a debtor may inadvertently have failed to list all creditors. In such instances, the plan may be modified either before or after confirmation. Modification after confirmation is not limited to an initiative by the debtor but may be at the request of the trustee or an unsecured creditor.