Have you encountered financial difficulties during your chapter 13 bankruptcy that have made it impossible for you to complete your payment plan? But do you still need to discharge your debts in order to get a fresh start in life?

You could convert to a chapter 7, but you might need to discharge a debt that cannot be wiped out in a chapter 7. Or perhaps a 7 would result in the liquidation sale of your home.  That is where the "hardship discharge" comes in.

A bankruptcy court may grant you a discharge in chapter 13, even though you have not made all of your payments, as long as:

  1. Your failure to complete the plan is due to circumstances beyond your control;
  2. Modifying your plan payment is not practicable; and
  3. At the time of the discharge, your plan has paid out at least as much as creditors would have received if your assets had been sold in a chapter 7.

The circumstances leading up to the request must also not be temporary or short term.  There are limits on what can be discharged in a chapter 13, so you should talk with me about this.

However, if you really need a discharge, and do not want to risk losing your home or another valuable asset, a hardship discharge may well be the solution you need.

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.