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What is a hardship discharge?

On Behalf of | Nov 12, 2018 | Chapter 13 Bankruptcy |

When you file for Chapter 13 bankruptcy in Tennessee, you must agree to a repayment plan. This plan outlines how much you will pay back each creditor you have. It is your obligation to repay your debts and stick to the plan as part of your bankruptcy agreement. If you complete the plan, the court clears any remaining debt, and you get a fresh start. However, sometimes things do not go the way you want. If you end up unable to fulfill your obligations, the U.S. Courts explain you could file for a hardship discharge.

This is an early discharge of your bankruptcy due to a financial hardship that makes you unable to continue following and paying under your plan. It is not easy to get and is not available to just anyone. You have to have solid proof that you are suffering a hardship that makes it impossible to repay your loan. The court must also validate that modification of your plan would not help the situation. Additionally, you have to have paid at least as much as your creditors would have received if you filed Chapter 7.

If you meet the requirements, you may file for a hardship discharge. The court will look at the documentation and make a ruling. If discharged, it is an early ending to your bankruptcy. The court will rule your case closed and obligations fulfilled. It will be as if you completed the plan as intended. This information is for education and is not legal advice.