What is a Hardship Discharge?
Chapter 13 Bankruptcy can be difficult. The repayment plans last from three to five years, and a lot of things can happen during that time frame. If you become unemployed or ill, what can you do? Several options exist, such as converting your case to a Chapter 7 Bankruptcy and modifying your repayment plan. However, this article will focus on the Hardship Discharge.
11 U.S.C. § 1328(b) allows Debtors to receive a Hardship Discharge to stop your repayment plan early and still received a Chapter 13 Bankruptcy Discharge. There are three requirements that must be bet to receive a Hardship Discharge.
First, your inability to complete your repayment plan must be attributable to circumstances for which the Debtor should not be held accountable. Disability, illness, death of a family member or job loss could all be reasons that would satisfy the first requirement.
Second, you must not be able to modify the plan to fix the problem. If your job loss or illness is only temporary, a Hardship Discharge may not be available for you. If lowering the payment would allow you to complete the plan, and the payment can be lowered, the Court will probably not allow a Hardship Discharge.
Third, your general unsecured creditors must have received as much through the Chapter 13 as they would have through a Chapter 7 Bankruptcy. If you had non-exempt equity in property when your case was filed, the unsecured creditors must have received at least the same amount as the total of your non-exempt equity in property.
If you are able to satisfy all of these conditions, then you may qualify for a Chapter 13 Hardship Discharge. Call me today with questions.