Illinois Bankruptcy Attorney Describes The Hardship Discharge

A hardship discharge is a discharge in a Chapter 13 case where you have not completed all of your required planned payments under the code.  You must have paid in at least what the creditors have received if you filed under Chapter 7.  Thus, the creditors are satisfied to the extent that if you did liquidation under Chapter 7 they would have received exactly that much or more than they’ve already received in the Chapter 13. 

Additionally, there must be a reason for the court to grant the hardship discharge. In many cases there may be a loss of income, there may be illness, and there may be other factors where the court is willing to accept the fact that the debtor can no longer make the payments to the Chapter 13 trustee.  However, the debtor has paid in at least what the creditors would get if the case was one filed under Chapter 7, and thus the court grants a hardship charge effectively ending the debtor’s requirement to make future Chapter 13 payments, and a discharge is acquired.