Key Takeaways / Summary:
- In order to confirm a Chapter 13 plan, the case and plan must have been filed in good faith
- Inaccurate disclosures and/or manipulation can be problematic if a good faith objection is brought
Navigating debt-related problems can feel overwhelming, especially when facing the possibility of losing your home, your vehicle or your business. Chapter 13 bankruptcy provides a structured pathway to reorganize debt, protect crucial assets, and work toward a manageable recovery. A successful Chapter 13 repayment plan involves satisfying specific standards set forth in section 1325 of the Bankruptcy Code.
In the Fourth Circuit, the good faith requirement means that the case and plan cannot be an abuse of the provisions, purposes or spirit of the Bankruptcy Code. This is considered based on the totality of the circumstances. The standard is amorphous as there are many purposes to the Bankruptcy Code and the balance of those purposes have changed since wage earner bankruptcy commenced in 1938. Likewise, the spirit of the Bankruptcy Code is an area where reasonable people can disagree.
Some areas of concern would be inaccurate disclosures or manipulation. Pre-bankruptcy planning is permitted and advisable, but some actions may be too much or misdirected.
Most chapter 13 plans do not have good faith objections brought. Possible indicators of such an objection would be contentious litigation preceding the bankruptcy case filing or domestic issues that are impacted by the chapter 13. An objection must be filed at least seven days prior to the confirmation hearing. If there is an objection, then a confirmation hearing is held where evidence and arguments are presented and the judge overrules or sustains the objection.
If plan confirmation is denied because a plan was submitted that lacked good faith then a new plan can be submitted. If plan confirmation is denied because the case itself was not filed in good faith then the debtor(s) may need to change to a different chapter or let the case be dismissed. A finding that the case itself was lacking in good faith is more problematic than a finding that the plan was not filed in good faith.
We offer clear guidance and do not charge upfront legal fees for Chapter 13 cases, making expert help an effective way to make sure your paperwork is accurate and ready to be approved.
To learn how a repayment plan may assist your situation, contact Sasser Law Firm to schedule a free consultation.
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