Does Chapter 11 Wipe Out All Debt?

No, Chapter 11 does not wipe out all debt. While it provides a mechanism for reorganizing and potentially discharging certain debts, there are specific types of debts that are not dischargeable under Chapter 11 bankruptcy.

Non-Dischargeable Debts

1. Alimony and Child Support: Debts for alimony, spousal support, and child support are not dischargeable. 13
2. Taxes: Certain types of tax debts, including fraudulent tax returns and taxes owed to the government, are not dischargeable. 13
3. Student Loans: Debts for most government-funded or guaranteed educational loans or benefit overpayments are not dischargeable. 13
4. Willful and Malicious Injuries: Debts for willful and malicious injuries to person or property are not dischargeable unless a creditor fails to object to their discharge. 13
5. Criminal Restitution Orders: Debts for certain criminal restitution orders are not dischargeable. 13

Dischargeable Debts

Chapter 11 can discharge a wide range of debts, including business debts and certain personal debts, but the specific debts that can be discharged depend on the reorganization plan and the approval of the bankruptcy court. 34

Conclusion

Chapter 11 bankruptcy does not automatically wipe out all debt. It is a complex process that requires careful planning and negotiation with creditors to determine which debts can be discharged and which must be repaid. Understanding the differences between dischargeable and non-dischargeable debts is crucial for navigating the Chapter 11 bankruptcy process effectively.