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Chapter 13

 

 

Individual Debt Adjustment

 

 

The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)

 

               a. background

               b. Advantages of Chapter 13

               c. Chapter 13 Eligibility

               d. How Chapter 13 Works

               e. The Chapter 13 Plan & Confirmation

               f. Making the Plan Work

               g. The Chapter 13 Discharge

               h. The Chapter 13 Hardship Discharge

              

The Chapter 13 Hardship Discharge

 

After confirmation of a plan, circumstances may arise that prevent the debtor from completing the plan. In such situations, the debtor may ask the court to grant a "hardship discharge." 11 U.S.C. § 1328(b). Generally, such a discharge is available only if: (1) the debtor's failure to complete plan payments is due to 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 precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge. The hardship discharge is more limited than the discharge described above and does not apply to any debts that are nondischargeable in a chapter 7 case. 11 U.S.C. § 523