Hardship discharges in Chapter 13 bankruptcies

On behalf of The Rollins Law Firm posted in Chapter 13 on Thursday, December 17, 2015.

Discharge of debt is not limited to Chapter 7 bankruptcy. Debt discharges can also occur in Chapter 13 bankruptcy.

In Chapter 13 bankruptcy, a debt repayment plan is formed for the debtor to follow. Generally, when the repayment plan that was agreed on is successfully completed by the debtor, certain remaining debts can be discharged.

In most cases, if the agreed-to Chapter 13 repayment plan is not successfully completed, no debt discharge occurs. However, there is an exception to this. In certain limited circumstances, a person who entered into Chapter 13 bankruptcy but is unable to successfully complete their repayment plan can receive a special debt discharge called a hardship discharge.

Typically, all of the following requirements must be met for a debtor in a Chapter 13 bankruptcy to receive a hardship discharge:

  • The debtor was not at-fault for the circumstances that caused the plan to be unable to be completed.
  • The circumstances that resulted in the failure to complete the plan were beyond the debtor's control.
  • It is impossible to modify the plan.
  • The creditors in the case have already received as much as or more than they would have under Chapter 7 bankruptcy.

As a note, the list of debts that can be discharged in a hardship discharge is a bit shorter than the list of debts that can be discharged in a typical Chapter 13 discharge.

As the hardship discharge illustrates, special circumstances can sometimes arise in a bankruptcy case which make it so the typical rules don't apply. This is one of the many contributors to the complexity of bankruptcy cases. Bankruptcy attorneys can help Chapter 13 bankruptcy filers with addressing any special circumstances that come up in their case and with navigating the different aspects of their case.

Source: U.S. Courts, "Chapter 13 - Bankruptcy Basics," Accessed Dec. 17, 2015

Client Reviews
I had a wonderful experience. The staff were nice and very informative. The process was quick and easy. Very affordable for me being a single parent. Would recommend anyone there. - Lashay H.
The Rollins firm assisted me at a very low point in my life. After having a lot of medical issues and expenses, I found myself unable to make ends meet. Mr. Rollings and his staff worked very promptly to help. They made the process so easy to complete. - Vinester Smith.
Fast response and professional advice. Really great to work with and understand what a difficult time in one’s life this is. Will recommend to anyone - Bryan Aust.
My wife and I were in an impossible financial situation where over time, we had built up so much debt that we could no longer keep up with all the payments. We were getting further and further behind until we reached out to the Rollins Law Firm for help. They have the knowledge and expertise through their experience to handle our particular situation. Their entire team of professionals are always available to answer questions, explain your options, and then provide the legal service that you need to relieve your financial worries and get you back on the right track! I recommend the Rollins Law Firm to anyone who needs help to deal with financial struggles. - Mike Zegelien.