One of the cornerstones of a Chapter 13 bankruptcy filing is the proposed repayment plan. This repayment plan typically lasts for three to five years. During this time period, you’ll make court-ordered payments to your creditors to pay some or all of your debt. At the conclusion of this time period, the remainder of your debts is discharged. However, many individuals find that due to changes in circumstances, it becomes impossible to meet the terms of the repayment plan. If you ever experience difficulty, see your bankruptcy attorney immediately to discuss your legal rights and options. Your bankruptcy lawyer may arrange for a hardship discharge, or cancelation of unsecured debts.
You may qualify for a hardship discharge if you’ve already paid your creditors at least as much as they would have gotten if you’d received a Chapter 7 discharge. As your bankruptcy lawyer can inform you, it’s easier to meet this condition if you have little nonexempt property.
The court may grant you a hardship discharge if you can demonstrate that your failure to meet the terms of the plan is due to circumstances beyond your control. For example, you may need to prove that you have a permanent physical disability that prevents you from working.
If you have trouble meeting the terms of the repayment plan, your bankruptcy attorney could ask the court for a modification of the terms. However, if your bankruptcy lawyer can prove that you could not meet the terms of the repayment plan even after a modification, you could qualify for a hardship discharge.
Even if you do qualify for a hardship discharge, be aware that not all of your debts may be canceled. A hardship discharge only eliminates non-priority, unsecured debts. Debts such as child support, alimony, and student loans cannot usually be discharged.
If you feel you may need a Chapter 13 bankruptcy hardship discharge, the bankruptcy lawyers at Cutler & Associates, Ltd. can help. You can also visit our website for more information about our exemplary services.