To take a guess you are on a slab. What I would do is to replace with a treated bottom plate and sister the studs that are there, no you don't really have to sister with treated wood but your bottom plate should be treated. Since your pre-existing bottom plate wasn't treated it started to rot and was moving upward, if that makes any sense. Also the drywall that was there was probably not a moisture drywall which I would highly recommend you use as you remodel.All of this can be done by you if you take your time and get the knowledge first, it really isn't that hard but the right tools are a big help. Most remodeling can be done with a circular saw and a sawzall, nail gun speed things up but are not a necessity.