What is a “prepackaged bankruptcy”?

A “prepackaged bankruptcy” is a form of bankruptcy filing that is filed with the court along with an agreement between the debtor and creditors on the terms of the bankruptcy. This agreement, or “prepackaged plan”, is filed with the court in advance of the hearing before the judge. It is usually a simpler form of filing than traditional bankruptcy proceedings, and can be approved quicker. In California, a prepackaged bankruptcy is typically used when the debtor and creditors can reach an agreement on how to settle the debtors’ liabilities without having to go through the full traditional bankruptcy process. Generally, the debtor and creditor representatives will form a negotiating team and work to develop an agreement that both parties are willing to accept. This agreement is then submitted to the court for their review and approval. Once the court has approved the agreement, the debtor is given the right to reorganize their debts and begin making payments. Typically, the prepackaged bankruptcy process is much faster than the traditional bankruptcy process and can be completed in a matter of weeks or months. Overall, a “prepackaged bankruptcy” in California is a simpler and quicker way for debtors to file for bankruptcy while still preserving their assets. This form of bankruptcy can be beneficial to both the debtor and creditors because it can help the debtor become financially stable and it can help the creditor receive payment faster than with a traditional bankruptcy.

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What is a “prepackaged bankruptcy”?

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