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

A payment plan, also known as a reorganization plan or repayment plan, is a key part of a Chapter 11 bankruptcy in South Carolina. It describes the way a debtor (the party filing for bankruptcy) proposes to repay creditors, or people or businesses that the debtor owes money to. In a Chapter 11 bankruptcy, the debtor is allowed to keep their assets and reorganize their debt into one affordable payment. In order to do this, the debtor must draft and submit a payment plan to the bankruptcy court. This plan must meet certain requirements, such as providing for payment of all creditors in a certain order and with the same priority as if the debt were not in bankruptcy. It must also provide for the payment of attorney’s fees, court costs, and other costs of administering the bankruptcy. The payment plan outlines how much money the debtor will pay each month, as well as how long the payment plan will be in effect. It also includes provisions for when the debtor may be allowed to modify payment terms, such as if the debtor’s income or expenses change. The payment plan is subject to approval by creditors and the bankruptcy court. Once the payment plan is approved, the debtor must make all payments on time in order to maintain compliance with the bankruptcy court. If the debtor does not follow the payment plan, the court may dismiss the bankruptcy case and the debtor’s assets may be used to repay creditors.

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

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