In Chapter 11, discharge occurs when?

In Chapter 11, discharge occurs when?

• A. Never; Chapter 11 does not discharge debts.
• B. When the plan is approved by a judge as fair and equitable and debts not provided for under the plan are discharged.
• C. Immediately upon filing for Chapter 11.
• D. Only after all creditors approve the plan.

Answer: (B)

In Chapter 11, discharge comes after the plan of reorganization is proposed and confirmed by the bankruptcy court. The plan must be shown to be fair and equitable for creditors, and it sets out exactly how debts will be treated. Once the judge confirms the plan, debts that aren’t provided for or preserved by the plan are discharged, meaning they’re wiped out under the bankruptcy. This is why the correct option emphasizes both court confirmation (fair and equitable) and the discharge of debts not provided for under the plan. If the plan isn’t confirmed, there is no discharge, and filing or merely obtaining creditor approval isn’t enough—the court must approve the plan. That’s why the other ideas don’t fit: discharge isn’t automatic upon filing, and it isn’t granted solely because creditors approve—the court’s confirmation is essential.

In Chapter 11, discharge comes after the plan of reorganization is proposed and confirmed by the bankruptcy court. The plan must be shown to be fair and equitable for creditors, and it sets out exactly how debts will be treated. Once the judge confirms the plan, debts that aren’t provided for or preserved by the plan are discharged, meaning they’re wiped out under the bankruptcy. This is why the correct option emphasizes both court confirmation (fair and equitable) and the discharge of debts not provided for under the plan.

If the plan isn’t confirmed, there is no discharge, and filing or merely obtaining creditor approval isn’t enough—the court must approve the plan. That’s why the other ideas don’t fit: discharge isn’t automatic upon filing, and it isn’t granted solely because creditors approve—the court’s confirmation is essential.