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

A payment plan in a Chapter 11 bankruptcy case is a plan that is presented by the debtor (the person filing for bankruptcy) to the court. The plan outlines how the debtor plans to repay all or part of their debts over a period of time. Generally, the debtor will make payments to their creditors according to the plan that is approved by the court. The payment plan that is approved by the court must meet certain requirements under the law which include: providing a payment schedule, identifying creditors and the amounts owed to them, outlining the total amount to be paid back and the length of time for repayment, and the debtor must make these payments in full and on time. The payment plan must be accepted by the court and creditors before it can be implemented. This requires the debtor and creditors to reach an agreement on how the remaining debt will be paid back. The payment plan should also consider the debtor’s current financial situation and their ability to make payments. In Washington State, Chapter 11 bankruptcies are overseen by the United States Bankruptcy Court. This means that the court must approve any payment plans that are proposed. Once the payment plan is approved, the debtor is responsible for making timely payments to creditors according to the terms of the plan. This allows the debtor to repay creditors without having to sell their assets.

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

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