What is a “payment plan” in a Chapter 11 bankruptcy?

A “payment plan” in a Chapter 11 bankruptcy is a proposed agreement between the debtor, or the person filing for bankruptcy, and their creditors, or those they owe money to, as to how the debt should be paid back. Payment plans are typically created by the debtor and may include different payment amounts, payment periods, and interest rates which the creditors must approve. In Mississippi, payment plans can be proposed to creditors and can outline how the debt should be paid back. It can include different amounts owed, different payment periods, and different interest rates. The payment plan must include evidence of the debtor’s ability to make the payments, such as wages, tax returns, or other financial statements. Once the payment plan is proposed, creditors can vote to accept or deny the plan. If the majority of the creditors vote in favor of the payment plan, then it becomes effective. If the creditors vote to deny the plan, then the debtor may be able to file a motion to modify the plan to make it more acceptable to the creditors. The payment plan is an important tool for debtors in a Chapter 11 bankruptcy as it allows for debtors to pay back their creditors in a manageable way and keep their assets. It is important to note, however, that if a debtor does not make payments according to the payment plan, then the bankruptcy court can appoint a trustee to take control of the debtor’s assets and force them into a liquidation.

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What is a “payment plan” in a Chapter 11 bankruptcy?

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