Are payments on secured debts suspended in a Chapter 11 bankruptcy?

In a Chapter 11 bankruptcy, the suspension of payments on secured debts depends on the action of the creditor. An individual or business filing for Chapter 11 bankruptcy may be able to restructure their debt and create a plan to pay it back. The court can then confirm the plan with the consent of the creditors and the debtor. Once the plan is confirmed, most creditors must accept payments specified in the plan. That being said, some unsecured creditors can choose to block the plan confirmation, leaving payments on secured debts suspended. This is because secured debts are the last line of defense for the creditor. If they turn down the payment plan, they can repossess the collateral and get paid from the debtor’s assets. Creditors may also agree to accept modified payments but still repossess the collateral. This means the creditor will accept an agreement to pay lower than the original debt amount, but they will still be able to repossess the collateral. In other words, the suspension of payments on secured debts largely depends on the action of the creditor. The debtor can present a payment plan to the court to be approved, but it is ultimately up to the creditor to decide whether to accept or reject the payment plan.

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Are payments on secured debts suspended in a Chapter 11 bankruptcy?

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