A Chapter 13 hardship discharge lets a court end your repayment plan early and discharge certain remaining debts when you cannot finish the plan for reasons outside your control. It is narrower than the full discharge you earn by completing a plan, and judges grant it only when finishing, or even modifying, the plan is no longer realistic.
The three-part test in section 1328(b)
The hardship discharge comes from section 1328(b) of the Bankruptcy Code. After notice and a hearing, the court may grant it only if all three conditions are met.
1. The failure is not your fault
You must show that you cannot complete the plan because of circumstances for which you "should not justly be held accountable." Courts usually look for events that are serious and likely to last, such as:
- A disabling illness or injury that prevents work for the foreseeable future.
- The death of a spouse or household member whose income funded the plan.
- A permanent loss of income, such as a job eliminated with no comparable work available, especially late in a career.
A temporary layoff or a short-term medical setback usually is not enough, because the court expects you to modify the plan and keep going.
2. Unsecured creditors got at least a Chapter 7 result
The value already paid to each unsecured creditor through the plan must be at least what that creditor would have received if your estate had been liquidated under Chapter 7, measured as of the plan's effective date. For many filers with mostly exempt property, that hypothetical Chapter 7 payout is small, which makes this condition easier to meet.
3. Modification is not practicable
The court must find that modifying the plan under section 1329 is not practicable. If a lower payment, a shorter term or a temporary suspension could still get you across the finish line, the hardship discharge is generally unavailable.
If an illness, job loss or death in the family has made your payments impossible, call (415) 754-0115 to schedule a free consultation before the trustee files a motion to dismiss, or reach us through our contact page. Your options narrow once a case is dismissed.
How a Chapter 13 hardship discharge differs from a full discharge
Completing every plan payment earns the broader discharge under section 1328(a). A hardship discharge is more limited in two important ways.
Fewer debts are covered
The hardship discharge does not reach any debt that would be excepted from a Chapter 7 discharge. That includes most student loans, domestic support, many tax debts and certain debts from divorce property settlements, which a completed Chapter 13 can sometimes discharge. Long-term debts that the plan kept current, such as a home mortgage whose arrears were being cured, also survive.
Secured debts are not erased
Liens on a house or car stay attached to the property. If you keep a financed vehicle or a home, you still owe the lender to keep it. A second mortgage stripped in the plan may also be affected, since lien-strip orders are generally tied to completing the case, so this issue deserves careful review.
For a refresher on what a standard discharge covers, see which debts are discharged in Chapter 7.
Alternatives the court will expect you to consider
Because the hardship discharge is a last resort, a good request explains why each alternative does not work.
Modifying the plan
A modification can reduce the monthly payment, suspend payments for a period, or change how much unsecured creditors receive, as long as the plan still meets legal requirements and does not run longer than five years from the first payment. Our guide to the Chapter 13 repayment plan explains how payments are calculated.
Converting to Chapter 7
If you pass the means test and are eligible for a Chapter 7 discharge, conversion may discharge more debts than a hardship discharge would. The trade-off is that a Chapter 7 trustee reviews your non-exempt property.
When conversion is not an option
Some filers cannot convert: income may still be too high, or a prior Chapter 7 discharge may fall within the eight-year window. In those situations the hardship discharge may be the only way to receive any discharge from the current case.
Voluntary dismissal
Dismissal ends the case but provides no discharge, and creditors can resume collection. It is usually the least protective path.
What the request process looks like
- Gather proof. Medical records, a doctor's statement about work capacity, termination letters, a death certificate, or benefit award letters.
- Compare the numbers. Your attorney calculates what unsecured creditors have received against a Chapter 7 liquidation analysis.
- File a motion. The motion explains the hardship, the payments made and why modification will not work, and creditors receive notice.
- Complete the financial management course. As with any Chapter 13 discharge, the post-filing debtor education requirement still applies.
- Attend the hearing if one is set. The trustee or creditors may object, and the judge decides.
Help from a Pleasanton Chapter 13 attorney
Bob Somal, Esq. represents individuals in Pleasanton, Livermore, San Ramon and across Alameda and Contra Costa Counties in Chapter 13, Chapter 7 and debt relief matters. When a plan is failing, the review covers all the options side by side: a modification, a conversion, or a hardship discharge. You get a clear picture of what each would protect and what would remain.
Timing matters here. A Chapter 13 hardship discharge request is far stronger when it is filed while the case is still open and the payment history is documented, rather than after the trustee has already moved to dismiss. If you can see trouble coming, raise it early so every option is still available.
Frequently asked questions
How late in a plan can I ask for a hardship discharge?
There is no minimum number of payments, but a longer payment history makes the Chapter 7 comparison easier to satisfy. Requests often come after a significant part of the plan has been paid.
Will the court grant it for a temporary job loss?
Usually not. Courts expect temporary problems to be handled through a modification or payment suspension.
Does a hardship discharge affect a future bankruptcy?
Yes. It counts as a Chapter 13 discharge for the time limits between discharges, which can affect when a later case could produce another one.
A plan that cannot be finished does not have to end in dismissal. Call (415) 754-0115 or write to us through the contact page for a free consultation. We will review your payment history and hardship and explain whether a modification, conversion or hardship discharge fits.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.