When Pennsylvania residents consider filing for Chapter 13 bankruptcy, there are several reasons why this can be preferable to a liquidation under Chapter 7, not the least of which is the oft-mentioned and accurate statement that a person can “keep your home” and “keep your motor vehicle.” However, even after the plan has been approved and a person is making the payments as required, problems might arise that prevent the debtor from completing the requirements detailed in the plan. There are still options available, albeit in tightly controlled situations.
When problems arise that make it impossible for the debtor to complete the bankruptcy plan, the hardship discharge is an alternative. It is important to remember there are certain narrow requirements that make a hardship discharge possible. First, the plan must have been confirmed.
In general, the hardship discharge can only be received in the following cases: the debtor is not completing the plan because of circumstances that are not within the person’s control and it is not their fault; the creditors have gotten at least as much as they would if it had been a Chapter 7; and there is no possibility of the plan being modified and injury or illness is stopping the person from having employment that will fund even a plan that has been modified. The hardship discharge will not apply to debts that would not be discharged in a Chapter 7.
Making the decision to file for personal bankruptcy is hard enough without more difficulties arising that make the continuing adherence to the Chapter 13 plan impossible. For those who have no other choice, there could be a way to have a hardship discharge before the plan is completed as outlined. A law firm that is experienced with helping clients who are considering filing for Chapter 13 and going through the process may be able to help with a hardship discharge, if it is applicable.