What does it mean, to “reorganize” one’s debts?
It means to give priority to what is necessary and discard, in whole or in part, what is not. The Bankruptcy Code allows debtors to modify the debts they owe. During a chapter 11 case, debtors may reaffirm necessary debts, sell burdensome assets, incur new indebtedness, modify union contracts, reject leases and unexpired contracts, and satisfy unsecured claims in full by paying a small percentage of what is owed. The order confirming a chapter 11 plan becomes a new road map for the individual or the business, and a new contract between the debtor and its pre-petition creditors, modifying the terms of previous obligations.
