Quick Answer
A hardship discharge under Section 1328 discharge requirements(b) lets you get out of a Chapter 13 plan early if circumstances beyond your control make it impossible to continue. You must meet three requirements: the failure isn't your fault, creditors got at least what they'd get in Chapter 7, and plan modification isn't possible.
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Sometimes life changes make it impossible to complete a Chapter 13 repayment plan. A job loss, a serious illness, a disability, or a family emergency can derail even the most carefully structured plan. Section 1328(b) provides a safety valve: the hardship discharge, which allows the court to grant a discharge even though the debtor has not completed all plan payments.
This site will explain the three requirements for a hardship discharge: (1) the debtor's failure to complete payments must be due to circumstances for which the debtor should not justly be held accountable, (2) unsecured creditors must have received at least as much as they would have in a Chapter 7 liquidation, and (3) modification of the plan must not be practicable.
We will also cover the important limitation that a hardship discharge under Section 1328(b) does not include the "superdischarge" benefits of a full Chapter 13 discharge under Section 1328(a). The hardship discharge only covers the debts that would be dischargeable in a Chapter 7 case.
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Frequently Asked Questions
What is a hardship discharge?
A hardship discharge under 11 U.S.C. Section 1328(b) allows a Chapter 13 debtor to receive a discharge without completing all plan payments. The court grants it when the debtor failure to complete payments is due to circumstances beyond the debtor control, like serious illness or job loss.
How do I qualify for a hardship discharge?
You must meet three requirements: the failure to complete payments is due to circumstances beyond your control, unsecured creditors have received at least as much as they would in a Chapter 7 liquidation, and modifying the plan is not practicable. All three must be satisfied.
What happens if I cannot complete my Chapter 13 plan?
You have several options: modify the plan to lower payments, convert to Chapter 7 if you qualify under the means test, request a hardship discharge under Section 1328(b), or allow the case to be dismissed. Each option has different consequences for your debts and property.
Check Your Bankruptcy Discharge Eligibility
Use the free screener at 1328f.com to check whether federal timing bars affect your ability to receive a bankruptcy discharge.
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