What happens when I fail to make a payment in a Chapter 11 bankruptcy?

When an individual files for bankruptcy under Chapter 11 in Alaska, they become legally obligated to make a repayment plan based on their assets and liabilities. However, if the debtor fails to make any payments under the repayment plan, the creditor can petition the court to have the debtor’s case dismissed. The court will then determine if the debtor’s failure to make payments is an intentional attempt to evade their responsibility to pay creditors, or if it is due to some other circumstances and the debtor simply cannot make the payments. If the court deems the former, then the debtor will immediately be denied any further access to the Chapter 11 process and the debt will not be dismissed, but instead remain a liability within the debtor’s credit report. This could lead to the debt being referred to collection or the creditor taking legal action against the debtor. On the other hand, if the court deems that the debtor cannot make the payments due to circumstances that are out of their control (such as a sudden job loss or a medical emergency) then the debtor may be able to move forward with the Chapter 11 filing. The court may also make adjustments to the repayment plan or provide additional time for the debtor to make the payments. Ultimately, if the debtor cannot make the necessary payments, they may have to convert their Chapter 11 filing into a Chapter 7 bankruptcy.

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What happens when I fail to make a payment in a Chapter 11 bankruptcy?

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