When must I pay my creditors during a Chapter 11 bankruptcy?

During a Chapter 11 bankruptcy in North Carolina, creditors must be paid according to the schedule set forth in the plan of reorganization. This plan may include payments to creditors over a period of time, or it may provide for a lump sum payment. The period of time during which creditors must be paid is determined by the court, and can range from 60 days to five years, depending on the specifics of the case. In addition, creditors must be paid in accordance with the priority of their claims. Secured creditors, such as mortgage lenders and those with liens on property, are given a higher priority and must be paid first. Unsecured creditors, such as credit card companies, are generally only paid if there is money left after secured creditors have been paid. It is important to note that the priority of claims is determined by federal law, not North Carolina law. Tax debts are also paid during Chapter 11 bankruptcies; however, taxes owed to the state of North Carolina are often negotiated differently from other debts. In addition, although the law allows for a Chapter 11 debtor to strip a second mortgage from their home, North Carolina has laws that limit the ability of debtors to strip mortgages in this way. Overall, the length of time and amount of money creditors must be paid during a Chapter 11 bankruptcy are determined by the court, and creditors are paid according to the priority of their claims. It is important for debtors to carefully consider all of their options before filing for bankruptcy and to speak with a qualified attorney in order to understand how their creditors will be paid.

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When must I pay my creditors during a Chapter 11 bankruptcy?

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