Hardship Discharge of Your Chapter 13 Bankruptcy

 

How to Get a Hardship Discharge of Your Chapter 13 Bankruptcy 

If you find you are unable to complete your chapter 13 payment plan, you can file a motion with the bankruptcy court requesting a hardship discharge. (11 U.S.C., 1328(b) 

The court will grant your request but only if three conditions are met: 

- Your situation must be extremely difficult and entirely unpreventable or foreseeable. Simply losing your job or getting sick won’t work here. And to make it even more difficult – your problem must appear to the court to be permanent with no end in sight. If you’re unable to work, you may be required to present medical evidence to the court.

- You’ve already paid the creditors somewhere around what they would have received under a chapter 7 bankruptcy.

- Modification of your payment plan can not be completed. You will be required to prove to the court that you have no reasonable way to make future payments, even under a modified plan.

Hardship discharges of this type are usually granted after natural disasters like hurricanes and earthquakes.

If you are granted a hardship discharge, you’re not out of the woods quite yet. There are debts that are non-dischargeable. They include: 

Secured debts

Priority debts

Student loans in most cases

Arrears on secured debts

Debts that were not included on your bankruptcy forms

Most federal, state, county and local taxes

Alimony, child support and debts that resulted from a separation or divorce decree

Debts resulting from driving while intoxicated

Debts that were not dischargeable in a previous bankruptcy and were dismissed due to misfeasance or outright fraud

Debts for dues, maintenance fees or assessments you owe to a cooperative or condominium owners association

Debts you owe to a profit-sharing, pension, stock bonus or other plan established under IRS code.