How does the court decide which debts to discharge in a Chapter 11 bankruptcy?

In Mississippi, bankruptcy courts decide which debts to discharge in a Chapter 11 bankruptcy based on the type of debt. The court will consider the type of debt, the amount of debt owed, and the value of the asset to be discharged. Some of the most commonly discharged debts include secured debt, unsecured debts, court judgments, taxes, and student loans. Security debt is a debt secured by personal property such as a home or automobile. This type of debt is often discharged if the value of the collateral is less than the amount owed. When the value of the collateral is more than the amount owed, then the debtor may be required to pay the difference. Unsecured debt includes credit cards, store cards, medical bills, and personal loans. These debts are usually discharged if the debtor does not have enough income to repay them. Court judgments are also typically discharged in Chapter 11 bankruptcy. These judgments may be for unpaid medical bills, unpaid rent, or other debts. Tax debts are usually discharged in a Chapter 11 bankruptcy as long as the debt is owed to the Internal Revenue Service (IRS) and the debt is more than three years old. Finally, student loans may be discharged in a Chapter 11 bankruptcy if the debtor can prove that the debt imposes an undue hardship on the debtor. The court may also discharge a portion of the debt if the debtor can demonstrate that they are unable to pay the full amount. Ultimately, the court will decide on the amount to be discharged for each type of debt. The decision will depend on the type of debt, amount owed, and the value of the asset discharged.

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How does the court decide which debts to discharge in a Chapter 11 bankruptcy?

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