What is a hardship discharge in a Chapter 13 bankruptcy?
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A hardship discharge is when the bankruptcy court decides to end your bankruptcy and approve a discharge earlier than was originally scheduled.
There are limited circumstances under which the debtor may request the court to grant a "hardship discharge" in a Chapter 13 case 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 beyond the debtor’s control, and through no fault of the debtor, after creditors have received at least as much as they would have received in a Chapter 7 case and when modification of the plan isn't feasible. Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge.
Consult with an attorney in order to determine if a hardship discharge makes sense in your individual situation because different bankruptcy judges across the country apply different standards as to what "hardship" means. Your attorney will know how the bankruptcy court in your area views "hardship." If the bankruptcy judge does not approve the hardship discharge, you may still be able to convert to a chapter 7 bankruptcy for additional protection. Your attorney will know how the bankruptcy court in your area views "hardship," and whether discharge or conversion is the best option for your situation.