Do All Debts Have to Be Repaid in a Reorganization Bankruptcy?
Whether you are considering a type of reorganization bankruptcy as a business or an individual, you may know that one of the primary benefits of this kind of bankruptcy is that it allows the debtor to restructure existing debts, to make payments over an extended period of time, and ultimately to get caught up with creditors. Yet the total amount that must be paid can be confusing, and debtors often have questions about whether any debts will be discharged in a reorganization bankruptcy, and whether all debts must ultimately be repaid during the length of the bankruptcy case.
In short, all debts do not necessarily have to be repaid in a reorganization bankruptcy, but each debtor’s circumstances will impact the amount of the regular payments and the total amount that must be repaid. Our West Palm Beach bankruptcy attorneys can explain in more detail.
Secured and Priority Debts Must Be Repaid Fully
In a reorganization bankruptcy case (which is usually Chapter 13 for individuals, and usually Chapter 11 for businesses, but can also include Chapter 12 bankruptcy, Subchapter V bankruptcy, and Chapter 11 for individuals), secured and priority debts must be repaid fully. Bankruptcy law determines which debts are considered priority debts, and those, along with all secured debts, must be repaid during the course of the repayment plan.
Nonpriority Unsecured Debts Can Be Eligible for Discharge
Under US bankruptcy law, nonpriority unsecured debts can be eligible for discharge in a reorganization bankruptcy. In other words, these debts may not need to be repaid fully during the course of the bankruptcy case, or paid at all. However, whether or not these debts must be repaid (and thus whether or not they can ultimately be discharged) will depend on the case.
Amount of Repayment Plans Will Depend on Various Factors
Whether a debtor must incorporate nonpriority unsecured debts into their repayment plan (and thus whether or not these debts must be repaid in part or in full) will depend on a variety of factors, including the debtor’s financial circumstances and the applicability of Florida exemptions for certain individual debtors. It is critical to discuss your specific financial circumstances with a bankruptcy lawyer to determine whether your nonpriority unsecured debts will need to be repaid or may be eligible for discharge.
Contact a West Palm Beach Bankruptcy Attorney Today for Assistance
Some debts may be eligible for discharge at the end of a reorganization bankruptcy, and it may be possible to catch up with creditors and to fulfill the terms of a reorganization bankruptcy while still having some debts discharged at the end of the case. However, it will depend on the debtor’s financial circumstances and the types of debts in the case. To find out more about what you or your business might be able to expect in a reorganization bankruptcy, you should get in touch with one of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan & Eller. Contact our firm today to ask any questions and to receive more information about a Chapter 13 or Chapter 11 filing in South Florida.
Source:
law.cornell.edu/uscode/text/11
