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Chapter 13 Hardship Discharge

Posted on: 12th Apr, 2007 03:54 pm
after my chapter 13 bankruptcy plan has started and i am not able to continue then how can i get a hardship discharge and when the court will allow it.
Hi Manilow,

Welcome to Mortgagefit discussion board.

After your Chapter 13 bankruptcy plan has started some circumstances can arise which results in you unable to continue making payments as per the plan.

If such situation arises you can ask the court to grant you hardship discharge. But court will consider such a request if:

  • Your creditors have been paid at least an amount which is equal to what they may have received in a Chapter 7 liquidation plan.

  • It is not possible to have a modification of the plan and

  • Your failure to complete payments as per the chapter 13 plan are due to circumstances over which you do not have any control and such circumstances have not arisen because of your own fault.

Do let me know if you have any other questions.

Posted on: 12th Apr, 2007 04:11 pm
additionally to the points blue mentioned, any illness or injury which stops you from getting a job by which funds would be available to continue a new modified payment plan can be the basis for getting a hardship discharge.

also, hardship discharge will not apply to such debts which are nondischargeable in a chapter 7 bankruptcy case.

Posted on: 12th Apr, 2007 04:31 pm
If you are a homeowner, you may be able to pay off that Chap.13 by refinancing your home and consolidating mortgage and the balance of the Chap. 13.

Depending on the balance you may save your credit and money at the same time.
Posted on: 12th Apr, 2007 06:00 pm
Hi Manilow,

Generally chapter 13 discharge releases a debtor from all debts mentioned in the repayment plan excepting those which are not allowed to be discharged under the plan. These debts include taxes including those for which you haven't filed the returns, debts incurred by fraud, student loans, criminal fines, debts from injury and certain home loans.

However, in your situation, if you are not able to follow the plan entirely, you may talk to the creditor and possibly if he is willing to help you out, he may modify the plan. This will be done off course with court approval.

Now, if you think you will not be bale to make any more payment, then requesting for a hardship discharge is the only way out. You need to collect the paperwork that you may have and which will help you to prove that you have gone through financial crisis for which you aren't responsible. You may even submit any medical proof of any injury due to which you will not be able to pursue your job and hence you will be unable to pay off the debts under the chapter 13 payment plan.

All you need is to speak out about your situation and show the proofs if any.

Good luck :)
Posted on: 12th Apr, 2007 11:58 pm
I have an illness that may cause me to be unable to work. Can I ask for a hardship discharge? I now owe less than $3,000.00 right now. But i do not have any money to pay that.
Posted on: 11th Aug, 2008 12:31 pm
Welcome Dee.

Is it a secured debt or unsecured debt? You should send a hardship letter mentioning the problems that you face and cause you for the non-payment. It also needs to be mentioned how you are going to pay.
Posted on: 12th Aug, 2008 03:04 am
how do you determine what the amount would be recieved by the people owed if you had to ask for a hardship discharge. I know you said that the balance of the debts owed has to have been paid down to what they would have got if you had filed ch 7, but how do you determine what that amount would be for chapter 7. And do you still have to finish paying back taxes if an hardship is allowed? Also does heart problems resulting in disability count as hardship. thanks
Posted on: 26th Aug, 2008 03:19 pm
Hi Tina,

Welcome to the forums.

Are you thinking of filing chapter7 bankruptcy? first of all, you will have to go through a means test and find out i you qualify for chapter7 or chapter 13. Then the trustee will guide you on how to move ahead with the bankruptcy including the amount you have to pay while in bankruptcy. I guess only a bankruptcy attorney can guide you on the filing procedure.

I haven't heard of a hardship discharge under chapter 7. I suggest that you check out the state laws or ask your attorney about it. Usually hardship discharge occurs under Chapter 13 when the person filing the Chapter can't follow the payment plan.

Take care
Posted on: 27th Aug, 2008 03:57 am
We filed bankruptcy for past due state and federal taxes some filed and some not. We filed in 2004, plan confirmed 2006. We have paid $20,000 into the plan. My income as a real estate agent in 2005 was 60K, in 2006 - 37K, in 2007 - 17K. Due to the economy, which are circumstances beyond my control, I have not been able to keep up with the payments. Can I get a hardship discharge?
Posted on: 26th Sep, 2008 04:00 pm
Hi Becky!

In most cases, injury or illness that precludes employment sufficient to fund a modified plan can be taken as a basis for a hardship discharge. You will have to consult an attorney to determine if a hardship discharge makes sense in case of reduction in annual salary due to the present economic situation. Bankruptcy judges across the country have different standards for judging the "hardship" means. Your attorney will know how the bankruptcy judge in your area will judge your case.
Posted on: 27th Sep, 2008 01:52 am
i have been on permanent disability since april of 2008. my income has decreased to 66 2/3% since i first filed for chapter 13. how will my mortgage and second mortgage be handled under these circumstances, if i file for a hardship discharge? i live in north carolina
Posted on: 15th Jan, 2009 05:13 pm
Hi Kathryn

As you are unable to pay the mortgage dues, you should immediately contact the lender and inform him. It will depend upon lender's discretion whether he will give you a new repayment plan or not.

Posted on: 16th Jan, 2009 12:47 am
I am in a Chpt 13 with my soon to be ex-wife, I am disabled and on Social Security Disability. What paperwork is necessary to apply for me to be moved to a chpt 7.

I have filled out new I's and J's but that is for the chpt 13.
Posted on: 18th Jan, 2009 08:44 pm
what do you do when you filed chapter 13, got the only trustee in this area and you made your current pymts ,plus money to the trustee every month only to find out that you were being forclosed on and your vehicle was getting reproed , come to find out the trustee wasn't making the pymts to the creditors. borrowed money from family. paid back pymts on mortgage and paid off vehicle. what do you do? also on top of all that you find out that the trustee won't sign off on the chapter 13, so all your pymts that we make are not being reported to the credit bureus?
you have fought to get your paymts reports with no luck, all because of the trustee not signing off.
saved home.
Posted on: 07th Feb, 2009 12:10 am

To Ron, I think you need to consult your bankruptcy attorney or trustee. They can guide you in the best possible way.

To Linparv,
You should contact the court asap and file a compliant against the trustee. You have every right to get back your money. If required, you may have to co-ordinate with a bankruptcy attorney to fight out your case.

Good luck
Posted on: 08th Feb, 2009 04:52 am
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