Dischargeable Debts in Chapter 11
The seasoned chapter 11 lawyers from Sasser Law Firm can discuss the long-term relief that chapter 11 can provide and which debts may be eligible for discharge. We have handled more than 7,000 cases and will put this extensive experience to use to help determine the best options for your case. Contact us today for a free consultation with a knowledgeable bankruptcy 11 lawyer who can advise you of your next steps.
What Debts Are Discharged by a Chapter 11 Bankruptcy?
Discharged debts are those that you are no longer legally required to pay back. A core goal of the many bankruptcy cases our lawyers handle is to discharge as much debt as possible to give you a fresh start. The more debt you can discharge, the faster you will be able to rebuild your financial foundation. If a debt is discharged, the creditor cannot take any further legal action against you and must cease all collection efforts.
Many debts can potentially be discharged, but see this list of dischargeable debts for more information:
- Business debts
- Credit card bills
- Back rent
- Medical bills
- Business loans
- Personal loans
The debts that may be discharged as part of your bankruptcy filing depend on several factors, including the chapter you file under, whether you create a plan of reorganization or liquidation, the types of debts you owe, and the circumstances surrounding the debt.
Working with a knowledgeable bankruptcy lawyer who understands the complexities surrounding chapter 11 discharge and bankruptcy is your best option for ensuring you maximize your bankruptcy relief.
What Are Non-Dischargeable Debts in Chapter 11 Bankruptcy?
Not all debts are dischargeable. You are responsible for paying back all non-dischargeable debts. Exceptions to discharge include:
- Debts for alimony, spousal support, or child support
- Certain types of tax debts, including fraudulent tax returns
- Debts for most government-funded or guaranteed education loans or educational benefit overpayments
- Consumer debts owed to a single creditor for more than $500 for luxury goods or services you incurred within 90 days before the bankruptcy order
- Cash advances of an aggregate of more than $750 from consumer credit accounts you took out within 70 days of obtaining bankruptcy relief
- Debts for willful and malicious injuries to others or property
- Debts for personal injury caused by your drunk driving
- Debts and loans owed to certain tax-advantaged retirement plans
- Debts involving fraud
- Debts involving fraud while acting in a fiduciary capacity that are part of a final judgment or consent order
If a debtor has executed a valid lien, the lien may remain after the bankruptcy case. This would allow the creditor to enforce the lien and recover the property that the lien is securing.
Not all of these debts are automatically excluded. Your creditor may have to proactively ask the bankruptcy court to exclude them from discharge. If they fail to make this request, the debt might still be discharged.
Additionally, some types of debts may not be technically “dischargeable,” but they may be historically difficult to discharge. Student loans are one common example of this type of debt.
When Does a Discharge Occur?
The timing of the discharge varies, based on the type of bankruptcy you file. In chapter 11 cases, the court often grants a discharge either upon confirmation or upon successful completion of plan payments.
Is a Chapter 11 Discharge Valid if the Debtor Later Fails to Carry Out the Plan?
A chapter 11 bankruptcy discharge is still valid if the debtor fails to carry out the plan as long as the court does not revoke the order of confirmation. However, it is important to keep in mind that an individual debtor does not receive a chapter 11 discharge until the completion of payments under the plan. There are some circumstances in which a debtor may still receive a chapter 11 discharge even if he or she has not completed the requirements payments under the plan.
A chapter 11 discharge is not valid if the court revokes it. While rare, a creditor or bankruptcy trustee can request the court revoke the discharge if the debtor fraudulently obtained the discharge. A request to revoke the discharge must usually be filed within one year of the discharge.
Contact a Chapter 11 Bankruptcy Lawyer Today
If you would like more information about chapter 11 discharge and how a bankruptcy can help, Sasser Law Firm can help. We have three board-certified bankruptcy specialist attorneys and can thoroughly investigate your case and determine which type of bankruptcy filing is best for you.
There is never any pressure to file. The choice is up to you. However, if you do want to move forward, we can confidently handle all aspects of your case. We want what is best for you and will work tirelessly to pursue the debt relief options that are best suited to you. We provide clear information about fees and how we operate, so you do not have to be worried about receiving a surprise bill.
Contact us online or give us a call at (919) 319-7400 for your free case review. At Sasser Law Firm, you will work directly with an attorney, not be passed off to a paralegal.