Although a Chapter 13 debtor generally receives a discharge only after completing all payments required by the court-approved repayment plan, there are some limited circumstances under which the debtor may request the court to grant a “hardship discharge.” After confirmation of a plan, there are limited circumstances under which the debtor may request the court to grant a hardship discharge even though the debtor has failed to complete plan payments.
Generally, such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances that are beyond the debtor’s control. This usually does not occur until after creditors have received at least as much as they would have received in a Chapter 7 liquidation case and when modification of the plan is not possible.
Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge. The hardship discharge does not apply to any debts that are nondischargeable in a Chapter 7 case.
The scope of a Chapter 13 “hardship discharge” is similar to that in a Chapter 7 case with regard to the types of debts that are excepted from the discharge. A hardship discharge also is available in Chapter 12 if the failure to complete plan payments is due to “circumstances for which the debtor should not justly be held accountable.”
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