What happens to secured creditors in a Chapter 11 bankruptcy?

In a Chapter 11 bankruptcy in Florida, secured creditors are creditors who have a lien on the debtor’s property as some form of collateral. Secured creditors will be able to collect the value of their collateral if the debtor has filed for bankruptcy. The debtor generally must either keep up with the payments on the debt or surrender the property to the creditor. The secured creditor will typically receive notice that the debtor has filed for Chapter 11 bankruptcy, and then the creditor can either file a proof of claim against the debtor or any other party responsible for the debt. The court will then decide whether the amount requested was appropriate or not. If the creditor is approved, they can then receive the proceeds from the creditor’s collateral and the rest of the funds will be distributed to other creditors. In some cases, the court may allow the debtor to keep the collateral if they can demonstrate that the property is necessary for their financial well-being. The debtor will also be required to make payments directly to the secured creditors until the debt is repaid in full. In some cases, if the debtor does not have enough cash to cover the secured debts, the creditors may be able to reorganize the loans and extend the time period for repayment. This will allow the debtor to keep their property and still make payments to the secured creditors. Ultimately, the primary goal of Chapter 11 bankruptcy is to allow the debtor to reorganize their finances and achieve stability.

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What happens to secured creditors in a Chapter 11 bankruptcy?

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