Chapter 13 hardship discharge
Florida residents who have difficulty paying their bills have several options for debt relief. Among those are different types of bankruptcy protection. Chapter 7 and Chapter 13 are personal bankruptcy options that offer similar benefits, but work differently. While Chapter 7 bankruptcy involves the liquidation of a debtor’s non-exempt assets with the proceeds being used to pay creditors, chapter 13 involves repayment of all or some portion of the debt pursuant to a court-approved plan.
There are income limits for filing under Chapter 7, and a Chapter 13 filing could be a viable alternative for someone who makes too much money to qualify for that chapter. Chapter 13 allows a debtor to keep property and provides for the discharge of some remaining unsecured debt after completion of the plan, which usually ranges from three to five years.
When someone who is under a Chapter 13 repayment plan is unable to keep up with the payments, it could be possible to have some remaining debt discharged. This is called a hardship discharge, and it could be granted if the reason for being unable to make continuing payments is beyond the debtor’s control. Sometimes a repayment plan can be modified, but if this is not possible or if the debtor cannot make payments even under a modified plan, a hardship discharge might be granted. Usually one will only be granted if payments already made are at least equal to what the creditors would have received under a Chapter 7 liquidation.
Filing for bankruptcy under either chapter will usually put a stop to collection efforts. This includes wage garnishment, phone calls, mailings and all other methods of contact for the purpose of collecting debts. There are a variety of eligibility requirements imposed by Chapter 13 that a lawyer can outline.