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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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