Modification Before Hardship Discharge

The Modification Requirement

The third element of a hardship discharge under Section 1328(b) requires that "modification of the plan under Section 1329 is not practicable." In other words, before the court will grant a hardship discharge, you must demonstrate that no reasonable plan modification can solve the problem.

This requirement reflects Congress's preference for plan completion over early discharge. A hardship discharge is meant to be a last resort, not a first option when plan payments become difficult.

What Modification Can Do

Section 1329 allows plan modification in several ways:

• Reduce payments -- Lower the monthly payment amount to match reduced income
• Extend the plan -- Stretch the plan from 36 months to 60 months (or from its current length to the maximum 60 months)
• Reduce unsecured payments -- Lower the percentage paid to unsecured creditors (subject to best interest test)
• Adjust secured claims -- Modify treatment of secured debts in some circumstances

When Modification Is "Not Practicable"

Modification is impracticable when no feasible modification exists that would allow the debtor to complete the plan. Examples:

• Permanent disability -- Income is permanently reduced to below what any modified plan would require
• Already at maximum length -- The plan is already 60 months and cannot be extended further
• Zero income -- The debtor has no income at all and no prospect of earning income
• Expenses exceed income -- Even with the lowest possible plan payment ($0 to unsecured), the debtor cannot make required secured or priority payments