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What Is The Chapter 13 Hardship Discharge?

On Behalf of | Feb 2, 2018 | Chapter 13 Bankruptcy

When a debtor qualifies for a Chapter 13 debt reorganization, they may enjoy many protections through the bankruptcy. These include shelter from collections tactics.

Unlike a Chapter 7 bankruptcy, which requires a debtor to forfeit their property to obtain a debt discharge, Chapter 13 allows debtors with sufficient income to repay all or a portion of their debt without forfeiting property.

However, in some cases, a debtor undergoing a Chapter 13 bankruptcy falls on unexpected financial difficulties, and the repayment plan approved under bankruptcy is no longer feasible.

To work with our firm on your Chapter 13 hardship discharge matter, call today!

Chapter 13 Bankruptcy Hardship Discharge

In cases like this, it is sometimes possible to seek a “hardship discharge”. Under a hardship discharge, the debtor is discharged from some or all of their unsecured debts but does not have to complete their three to five-year repayment plan.

Understandably, courts are hesitant to simply hand these discharges out without carefully scrutinizing the circumstances of a debtor asking for one.

Qualifications for Hardship Discharge

In order to qualify for a hardship discharge, the following Chapter 13 hardship discharge requirements must be met:

  • Fail to make payments according to plan, through no fault of their own
  • Have already paid creditors as much or more than they might receive in a Chapter 7 liquidation
  • Have no way to complete a modified version of the existing plan

In many cases, these kinds of hardship discharges are available to those who fall ill and cannot work to pay for their debt

If you suspect that a hardship discharge is your only options, be sure that you understand the many factors at play in your own affairs before moving forward. An experienced bankruptcy attorney can help you address these issues and make sure that you don’t overlook critical benefits or protections.

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Contact us today for your free consultation regarding hardship discharge.