When you file Chapter 13 bankruptcy, you set up a repayment plan with a three to five year timeline for paying back the debts you owe. In those three to five years, though, it is well understood that a lot can happen. Your financial picture at the time of the filing may turn out to be quite different a few years down the road. In the case of a positive change, that’s a good thing; you have more money to repay your debts. In the case of a negative change, it may become unfeasible to continue to make repayments under the original Chapter 13 outline.
Under certain circumstances you are able to receive a full discharge of your remaining debts under Chapter 13 using something called the “hardship discharge.” This is a motion filed with the Clearwater bankruptcy court explaining your modified circumstances and fully documenting your inability to continue to make payments.
Three criteria must be met to prove that you are eligible for a hardship discharge. First you must show that you are no longer able to make the payments due to circumstances beyond your control, such as a medical disability. Second, your unsecured creditors must have received in repayment what they would have received under a typical Chapter 7 filing. Third, you must show that modifying the Chapter 13 repayment plan would not help, or that you would not be able to make even the modified payments.
A hardship discharge will not discharge debts that are required to be paid under Chapter 13 requirements, such as child support, alimony, most tax debts, student loan debts, and others.