Plans of Reorganization

December 15, 2021
Plans of Reorganization

How Does a Plan of Reorganization Work?

Most of our bankruptcy clients are consumers who move through a Chapter 7 bankruptcy quickly, getting a fresh start. However, many of our clients are individuals, small businesses, and farmers who need the relief of Chapter 11, 12, or 13 bankruptcies.  In each case, they need to form a plan of reorganization. How do we do that to get a plan confirmed in Kansas or Western Missouri?

Each chapter of bankruptcy has special rules about what needs to go into a plan of reorganization.  In Chapter 13, each district (including the District of Kansas and the Western District of Missouri) has a model plan to use and we have to include our client’s debts into that plan to repay over 3-5 years. In Chapters 11 and 12, however, there is no model plan and we have more flexibility.

While we’ve successfully worked to court confirmation (court approval) of Chapter 11 and 12 plans, each plan is carefully tailored to help our farmers and small business clients (and, in Chapter 11, individuals too!). Some debts, like debts secured by a home mortgage or farm equipment, can be stretched beyond the 5 years we’d be limited to in a Chapter 13 plan. Other debts, like income tax liabilities, need to be paid back within 5 years.

In each plan of reorganization, creditors without collateral need to get what they would receive if our clients went through Chapter 7 and liquidated. The creditors also have certain rights that remain until our clients receive a discharge.

Plans of reorganization are technical and you should get an attorney who specializes in bankruptcy to help you through the confirmation of your plan. Getting a plan confirmed, especially over challenges of a trustee, creditor, or committee, can be challenging.  Fortunately, we have attorneys who have worked extensively with reorganizations and can help you through the process.

Contact Us

For more information, visit our website at www.kansascitybankruptcy.com or contact us for a free, no-obligation consultation with one of our attorneys to determine if bankruptcy can be helpful for you. At WM Law, we are Here to Help.

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