For many across the country who are languishing in a pile of debt that seems insurmountable, filing for bankruptcy is often a last resort that can offer some much-needed relief. However, not all bankruptcies are created equal, with each different type entailing different provisions and benefits. Chapter 13 bankruptcy is an excellent option for those who do wish to make good on their debts, but simply need the strength of the law on their side to help create a payment plan that is both tenable for the debtor and acceptable to the creditor. Chapter 13 bankruptcies are employed to establish a three- to five-year plan for repaying debts, while granting the debtor relief from the collection efforts of creditors.
Sometimes, however, an individual who enters into a Chapter 13 bankruptcy is unable to complete the repayment schedule for various reasons and may seek instead to receive a hardship discharge. While it is possible for such a discharge of debts to be granted, they are not easy to come by, and are generally reserved for very specific situations.
In order to qualify for a hardship discharge under Chapter 13, an individual must meet three standards of need. First, the individual must have already filed for a Chapter 13 repayment plan and then become unable to abide by the terms of the plan through no fault of his or her own. Second, the relevant creditors must have already been repaid at least as much as they would been repaid under the terms of a Chapter 7 liquidation. Third, the individual must prove that even a modified version of the existing payment plan is not possible to follow. For example, if the debtor has filed for a Chapter 13 plan and then falls ill and cannot continue employment, then a hardship discharge may be considered.
Bankruptcies are a serious matter that must be undertaken with sober judgment, but they are also an excellent from of legitimate relief for many individuals who are in dire financial straits. If you believe that Chapter 13 or some other form of bankruptcy may be the right solution for your situation, the assistance of an experienced attorney can help you navigate this difficult season while protecting your rights.