On occasion, there are circumstances that prevent a debtor from being able to continue making their chapter 13 payments.  In very limited circumstances, the debtor(s) may qualify for a hardship discharge.  If a debtor does qualify, the chapter 13 would be discharged without making any additional payments as if the plan was completed under the original terms.  Section 11 U.S.C. § 1328(b) provides that a debtor may qualify for a hardship discharge where:
1. The debtor’s failure, or inability, to complete plan payments is due to circumstances completely beyond the debtors control and through no fault of the debtor.  A common example of this would be an extreme medical condition or illness that affects income or your ability to produce income.
2. The creditors have received at least the amount that they would have received in a Chapter 7 Case.  This is something you will want to speak with your attorney about.  The assets you have, types of debt that you have, and what you have already paid into your plan will be the determining factors for this qualification.
3. Modification of the plan is not possible.  Again, this is something you will want to speak to your attorney about.  If it is possible for you to modify the plan or covert to a Chapter 7 that may be the more appropriate course of action.
It is important to note that qualification for a hardship discharge is very difficult and simple changes in employment, changes in hours, or similar issues will not qualify you for a hardship discharge.  The other important issue to note is that the hardship discharge has a very limited applicability.  The hardship discharge will not discharge any debt that would not be dischargeable by a Chapter 7 Bankruptcy, including, but not limited to, certain debts owed to governments, domestic support obligations, and student loans.
If you have any questions, or would like to speak with a St. Louis Bankruptcy Attorney, please feel free to contact us.