A Chapter 13 Hardship Discharge is a legal action that allows a debtor to receive a discharge from their outstanding debts without the need to complete their repayment plan. This type of discharge is available in limited circumstances and is only available in a Chapter 13 bankruptcy. There are two types of Chapter 13 Hardship Discharges: Total Hardship Discharge and Partial Hardship Discharge. A Total Hardship Discharge eliminates all the debtor's debts, except those which are not dischargeable such as certain taxes, child support, student loans, and criminal fines. To qualify for a Total Hardship Discharge, the debtor must prove that their financial situation has changed since filing for bankruptcy, and they are unable to make their plan payments. A Partial Hardship Discharge eliminates some of the debtor's debts, but does not eliminate all of them. To qualify for a Partial Hardship Discharge, the debtor must prove that their financial situation has changed since filing for bankruptcy, and they are unable to make their plan payments. The debtor's income must also be below a certain level in order to qualify for a Partial Hardship Discharge. In either case, the debtor must also demonstrate that they have made a good faith effort to make their plan payments and that their current financial situation is unlikely to improve in the future. The court will evaluate the debtor's financial situation and determine if a Chapter 13 Hardship Discharge is appropriate.
Chapter 13 Hardship Discharge
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How to fill out Chapter 13 Hardship Discharge?
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FAQ
To obtain the hardship discharge the debtor must first show an inability to continue making the scheduled Chapter 13 plan payments. In other words, something has happened to you financially that reduced your income or ability to pay your creditors. The change in finances must be beyond the debtor's control.
Hardship vs Dependency. Terminology can get confusing because "hardship" and "dependency" discharges are often both loosely labeled "hardship." Specifically, a hardship discharge is when the financial needs of family member(s) require more than the military member can provide while remaining in the military.
To qualify for a hardship discharge, the change in your circumstances must not be your fault. Also, you must typically show that a serious and permanent reason or condition prevents you from completing your plan, such as a life-changing medical condition that arose after filing your case.
How to Qualify for a Chapter 13 Hardship Discharge Prove that you were unable to complete payments due to circumstances beyond your control.Have paid unsecured creditors an amount equal to that of a Chapter 7 bankruptcy.Show it's not feasible to modify your current plan.
(2) Hardship. Hardship exists when, in circumstances not involving death or disability of a member of a Soldiers family, separation from the service would materially affect the care or support of the Soldier's family by materially alleviating undue hardship.
Generally, this discharge requires severe medical, psychological or financial problems in the member's immediate family. Medical and psychological problems are termed dependency, while financial problems are described as hardship, though many military personnel use the terms interchangeably.
Some examples of dischargeable debts in Chapter 13 include credit card debt, medical bills, utility bills, and personal loans. Unsecured Debts ? Unsecured debts are not linked to any collateral, such as utility bills and medical bills.
An example of a Hardship Discharge would be if you are married and have children, but your spouse dies, leaving you to the sole parent to children. What is this? In this case, your kids' care takes priority, and the military will grant a Hardship Discharge because it is convenient for the government.