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

In Chapter 11 bankruptcy of Wisconsin, the court decides which debts to discharge based on the type, size, and priority of debts owed by the debtor. Generally, the court looks at the total amount of debt held by the debtor, their ability to make payments on the debts, and the amount of assets available to the debtor. In addition, the court will consider the debtor’s income, expenses, and the availability of any additional sources of income and assets which may be available to the debtor. The court will also look at the type of debt owed by the debtor. Secured debts, such as mortgages, usually cannot be discharged in a Chapter 11 bankruptcy. Unsecured debts, such as credit card debt, can often be discharged in a Chapter 11 bankruptcy, provided that the debtor has not used the debt to buy luxury items, such as vacations or fancy cars. The court will also look at the priority of the debt. High-priority debts, such as those secured by certain types of property (like a house or car) or those owed to government agencies, must be paid off first. Lower priority debts, such as medical bills and certain types of personal loans, can usually be discharged after the higher priority debts are paid off. Finally, the court may take into consideration the debtor’s ability to pay all of the debts. If the debtor is not able to pay all of their debt, the court may order a “partial discharge” of the debts, meaning that the debtor is only obligated to pay a portion of the total debt amount.

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

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