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

A Chapter 11 bankruptcy is a form of bankruptcy protection that offers businesses the chance to reorganize their financial debts while still operating. In the state of Texas, filing for Chapter 11 bankruptcy gives creditors certain protections and allows the business to pay their creditors over time. When filing for Chapter 11 bankruptcy protection, the court will provide an automatic stay, which protects the debtor from both current and future creditor actions. This includes any kind of collection attempts such as wage garnishments and foreclosures. The ultimate goal of a Chapter 11 bankruptcy is for the business to come up with a plan that will enable them to pay their creditors while still allowing them to remain in operation. During the duration of the Chapter 11 bankruptcy, the debtor must pay their creditors as much as they can reasonably afford to pay. The court will review both the amount of the payments as well as the frequency of the payments. The debtor is required to complete their payments according to the plan that is approved by the court. It is important to note that the debtor must continue to make payments for as long as the repayment plan is in effect, or until all of their creditors have been paid in full. If the debtor fails to make payments as specified in the plan, the bankruptcy court could revoke the protection it has provided.

Related FAQs

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

Related FAQs

Related Blog Posts