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

In Texas, the court decides which debts to discharge in a Chapter 11 bankruptcy on a case-by-case basis. Generally, debts that are not considered to be “dischargeable” include debts incurred through fraud or misrepresentation, certain taxes and penalties, and debts caused by willful or malicious harm. Other debts, such as student loans, spousal or child support, and criminal fines and restitution are also usually not dischargeable. The court also considers a variety of factors when deciding which debts to discharge in a Chapter 11 bankruptcy. These include the debtor’s financial situation, their ability to pay their debts, and the nature of the debt. For example, the court may determine that a debt taken out to pay medical expenses is more likely to be discharged than a debt taken out to purchase luxury items. Finally, the court takes into consideration the potential impact that granting the discharge would have on creditors. For example, if granting the discharge would likely cause undue hardship for the creditor, the court may choose not to discharge the debt. Ultimately, the court must carefully evaluate each case to determine which debts should be discharged in a Chapter 11 bankruptcy. All of the relevant facts and circumstances, as well as any applicable legal requirements, are considered in order to achieve a fair and equitable outcome for both the debtor and their creditors.

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

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