A chapter 13 discharge is distinct from a chapter 7 discharge. A chapter 13 discharge releases a chapter 13 debtor from the legal obligation to repay all debts provided for by the plan or disallowed, with some exception. Some debtors may fail to complete their chapter 13 plan and consequently, never receive a discharge. However, after chapter 13 plan confirmation, despite a failure to meet all of the plan’s requirements, a debtor may still receive a discharge in certain circumstances. For these debtors who encounter these difficulties, they may move or petition the bankruptcy court to grant a “hardship discharge.”

Generally, such a discharge is available only if all of the following are applicable:

1. the debtor’s failure to complete plan payments is because of circumstances beyond the debtor’s control and through no fault of the debtor;
2. creditors have received at least as much as they would have received in a chapter 7 liquidation case; and
3. modification of the plan is not possible.

Injury or illness that prevents a debtor from employment to earn sufficient income to fund a chapter 13 plan may provide the basis for a hardship discharge, although such a discharge is more limited than a standard chapter 13 discharge and does not apply to any debts that are nondischargeable in a chapter 7 case.

If you are facing overwhelming financial hardship, bankruptcy may a solution. Alberto Montefalcon has the legal knowledge to assist anyone who must consider filing a chapter 7 or 13 bankruptcy case. The experienced Sacramento metropolitan area/Northern California attorneys at the Montefalcon Law Offices are here to help you if your financial position necessitates the consideration of a bankruptcy case filing under Chapter 7, 11, or 13. Contact us online or schedule a consultation at any of our three conveniently located offices. Telephone our downtown Sacramento office at (916) 444-0440, our South Sacramento office at (916) 399-9944, or our Concord office at (925) 222-592.