Hardship discharge

When can you get a Chapter 13 hardship discharge?

In Chapter 13, a debtor is usually entitled to a discharge only after completing all payments under the plan. The hardship discharge is the exception. (The military uses the same name for a different kind of discharge from service.) 2

After the plan is confirmed, the court may grant a hardship discharge only if three conditions are met. The failure to finish must be due to circumstances for which the debtor should not justly be held accountable. Unsecured creditors must have received at least what they would have been paid in a Chapter 7 liquidation. And modifying the plan must not be practicable. 1

An injury or illness that prevents enough work to fund even a modified plan is the kind of event that may support one. The court decides after notice and a hearing. 1

It is narrower than a regular Chapter 13 discharge. It covers unsecured debts provided for by the plan or disallowed, and it does not apply to any debt that is nondischargeable in a Chapter 7 case. 1

The debtor education rule still applies. The court may not grant a Chapter 13 discharge, including a hardship discharge, unless the debtor completed a personal financial management course after filing, with limited exceptions. 1