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Confirmation Of Plan
LAWDOG is intended to assist in the understanding of basic concepts. See Disclaimer. Always obtain legal advice from legal professionals.
Confirmation Of A Chapter 12 Plan
Secured Claims
Effect Of Chapter 12 Confirmation
Modification Of A Confirmed Plan
Confirmation Of A Chapter 12 Plan
A Chapter 12 plan requires approval by the court after notice to all the creditors, and a hearing. At the hearing, the court generally must confirm a plan which complies with Section 1225. These requirements for confirmation include a finding that the plan is in compliance with applicable law, that the debtor has paid all fees and charges, a finding that the plan is proposed in good faith, and that the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under a Chapter 7 bankruptcy on such date, and that the debtor is able to make all payments under the plan. See Section 1225 reproduced here for illustration purposes only.
Section 1225 (b) provides that if an objection is made by the Trustee or an allowed unsecured creditor, the Court may still confirm the plan if, as of the effective date of the plan:
"(A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor's projected disposable income to be received in the three-year period, or such longer period as the court may approve under section 1222(c), beginning on the date that the first payment is due under the plan will be applied to make payments under the plan."
A secured claim under the Bankruptcy Code is an allowed claim secured by a lien on property of the debtor, or subject to a setoff. The Chapter 12 plan must provide that, for each allowed secured claim, the creditor accept the plan, or that the debtor surrender the property, or the plan must provide that the creditor retain the lien securing such claim, and provide a distribution of cash installments or other property with a present value, on the effective date of the plan, of at least the allowed amount of the secured claim. See Section 1225 (a)(5) reproduced here for illustration purposes only. Also see Secured Claims from previous menu.
Effect Of Chapter 12 Confirmation
After approval, the provisions of a confirmed plan bind the debtor, each creditor, each equity security holder, and each general partner in the debtor, whether or not their claim is provided for by the plan, and whether or not such creditor, such equity security holder, or such general partner in the debtor has objected to, has accepted, or has rejected the plan.
Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor, free and clear of any claim or interest of any creditor provided for by the plan. See Section 1227 reproduced here for illustration purposes only.
Modification Of A Confirmed Plan
At any time after confirmation of the plan, but before the completion of payments, the plan may be modified, on request of the debtor, the trustee, or the holder of an allowed unsecured claim, to increase or reduce the amount of payments on claims of a particular class provided for by the plan; extend or reduce the time for such payments; or alter the amount of the distribution to a creditor whose claim is provided for by the plan to the extent necessary to take account of any payment of such claim other than under the plan. See Section 1229 reproduced here for illustration purposes only.
Confirmation of a Chapter 12 plan does not grant a discharge to the debtor. After completion by the debtor of all payments under the plan, the court may grant the debtor a discharge of all debts provided for by the plan. See Conversion, Discharge, & Dismissal from previous menu, or here. Link does not return to this page.
