What is a hardship discharge in bankruptcy?

A hardship discharge under 11 U.S.C. Section 1328(b) allows a Chapter 13 debtor to receive a discharge before completing all plan payments when circumstances beyond the debtor's control prevent plan completion.

What are the requirements for a hardship discharge?

Three requirements must be met: (1) the failure to complete payments is due to circumstances not the debtor's fault, (2) unsecured creditors have received at least as much as they would in a Chapter 7 liquidation, and (3) modification of the plan is not practicable.

Does a hardship discharge cover all debts?

No. A hardship discharge under 1328(b) is narrower than a regular Chapter 13 discharge under 1328(a). It does not discharge debts that would be nondischargeable under Chapter 7, including student loans, certain taxes, fraud debts, and domestic support obligations.

Hardship Discharge in Bankruptcy

When life makes it impossible to finish your Chapter 13 plan, a hardship discharge under 11 U.S.C. Section 1328(b) may provide relief

Key point: A hardship discharge is available only in Chapter 13. You must show three things: (1) circumstances beyond your control, (2) creditors received at least what they would in Chapter 7, and (3) plan modification is not practicable.

What Is a Hardship Discharge?

A hardship discharge allows a Chapter 13 debtor to receive a discharge even though the debtor has not completed all payments under the confirmed plan. It is codified at 11 U.S.C. Section 1328(b).

This is different from the standard Chapter 13 discharge under Section 1328(a), which you receive after completing all plan payments. The hardship discharge exists because Congress recognized that some debtors face genuinely unforeseeable circumstances -- job loss, serious illness, disability, or death of a spouse -- that make plan completion impossible.

Three Requirements for a Hardship Discharge

Courts apply a strict three-part test. All three must be satisfied:

1. Circumstances Not the Debtor's Fault

The failure to complete plan payments must be due to circumstances for which the debtor should not justly be held accountable. Common qualifying events:

Serious illness, injury, or disability
Loss of employment through no fault of your own (layoff, plant closing)
Death or disability of a spouse who contributed to plan payments
Divorce that destroys the household income needed for plan payments
Natural disaster (flood, tornado, fire) causing uninsured losses

Voluntary job changes, quitting, or failing to seek new employment typically do not qualify.

2. Best-Interest-of-Creditors Test

Unsecured creditors must have received at least as much as they would have received in a Chapter 7 liquidation. This is the same test applied at confirmation under Section 1325(a)(4). The court looks at what nonexempt assets would have been available to a Chapter 7 trustee.

3. Modification Is Not Practicable

You must show that modifying the plan under Section 1329 is not feasible. If you could reduce payments and still complete a modified plan, the court will deny the hardship discharge and direct you to modify instead. See our plan modification guide.

Hardship Discharge vs. Regular Chapter 13 Discharge

Feature	Regular Discharge (1328(a))	Hardship Discharge (1328(b))
Plan payments	All payments completed	Payments not completed
Scope	Broader -- discharges most debts including some not dischargeable in Chapter 7	Narrower -- same scope as Chapter 7 discharge
Student loans	Not discharged	Not discharged
Fraud debts	May be discharged	Not discharged (523(a)(2))
Willful injury	May be discharged	Not discharged (523(a)(6))
Court approval	Automatic after plan completion	Requires motion and hearing

How to Request a Hardship Discharge

File a motion with the bankruptcy court requesting a hardship discharge under Section 1328(b)
Provide evidence of the circumstances preventing plan completion (medical records, termination letter, disability determination)
Show the math -- demonstrate that unsecured creditors received at least what they would have in Chapter 7
Explain why modification fails -- attach a proposed modified plan showing it is not feasible
Attend the hearing -- the court will schedule a hearing on your motion

For detailed filing procedures, see our step-by-step request guide.

Debts NOT Discharged Under a Hardship Discharge

Because a hardship discharge has the same scope as a Chapter 7 discharge, the following debts survive:

Domestic support obligations (alimony, child support)
Most tax debts
Student loans (unless undue hardship is proven in an adversary proceeding)
Debts from fraud, embezzlement, or larceny
Debts from willful and malicious injury
Government fines and penalties
DUI/DWI judgments

Common Reasons Courts Deny Hardship Discharges

The debtor caused the inability to pay (quit a job, overspent)
Plan modification is still possible
Creditors received less than they would have in Chapter 7
Insufficient evidence of the hardship
The debtor did not complete the required financial management course

Alternatives to a Hardship Discharge

Before requesting a hardship discharge, consider these options:

Plan modification -- reduce payments under Section 1329 (guide)
Conversion to Chapter 7 -- if you now qualify for Chapter 7 under the means test
Voluntary dismissal -- dismiss the case and start over later

See our full alternatives comparison.

Related Resources

Bankruptcy Hardship Guide | Requirements | Qualifying Circumstances | Case Law | Chapter 13 Plan Guide