What is a hardship discharge in a Chapter 13 bankruptcy?

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hardship discharge consumer bankruptcy

What is a hardship discharge in a Chapter 13 bankruptcy?

There are limited circumstances under which the debtor may request the court to grant a “hardship discharge” in a Chapter 13 case even though the debtor has failed to complete plan payments. Generally, such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor’s control, and through no fault of the debtor, after creditors have received at least as much as they would have received in a Chapter 7 case and when modification of the plan isn’t feasible. Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge.

Consult with an attorney in order to determine if a hardship discharge makes sense in your individual situation different bankruptcy judges across the country apply different standards as to what “hardship” means. Your attorney will know how the bankruptcy court in your area views “hardship.”

(Reviewed 11.14.08)

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