A hardship discharge under 11 U.S.C. 1328(b) lets you receive a discharge without completing your plan payments. It's for the case where something genuinely outside your control ended your ability to pay.
Three conditions have to be met, and courts hold you to all of them. It's not a general escape hatch for a plan that got difficult.
The three requirements
- Your failure to complete the plan is due to circumstances for which you shouldn't justly be held accountable. A disabling illness, a permanent loss of employment in a shrinking field, the death of a spouse whose income funded the plan.
- Unsecured creditors have already received at least what they would have gotten in a Chapter 7 liquidation. This is the liquidation test again, and in many plans it's already satisfied.
- Modifying the plan isn't practicable. If a lower payment could work, the court expects you to modify instead.
That third one is where most requests die. Judges want to see that modification was genuinely considered and genuinely won't work.
What counts as hardship
A car accident that leaves you unable to work. A cancer diagnosis. A stroke. The death of the earner in a two-income household. Plant closures and industry collapses in some cases.
What generally doesn't count: overspending, a voluntary job change to lower-paid work, a new financial obligation you took on during the case, or a business that failed for ordinary business reasons. Courts distinguish between bad luck and bad choices, and the line isn't always where debtors think it is.
The discharge is smaller
A hardship discharge covers less than a completed-plan discharge. Debts that are non-dischargeable in Chapter 7 stay non-dischargeable here, and the broader Chapter 13 discharge you would have earned by finishing does not apply.
What you lose
Lien strips generally require plan completion. A second mortgage you were stripping usually survives a hardship discharge and stays on the property. Long-term debts that extend past the plan, like your first mortgage, aren't discharged either, which is expected but worth stating plainly.
So a homeowner who got a hardship discharge in month 30 may finish with the case closed, the credit card debt gone, and the second mortgage still recorded against the house.
“I've filed a handful of these in twenty years. They're rare because the facts have to be genuinely bad, and because most struggling clients are better served by a modification or a conversion. But when the facts fit, it's the right tool.”
Naomi Reyes-AshfordHow it gets requested
By motion, with notice to creditors and the trustee and a hearing. You'll need documentation: medical records, disability determinations, termination letters, death certificates. General statements about hardship aren't going to carry it. The court wants the paper.
You also need the financial management course completed, same as any Chapter 13 discharge.
The alternatives to weigh first
Modification, if any payment is sustainable. Conversion to Chapter 7, if you qualify and the assets are protected. Voluntary dismissal, if a new case later would work better. Each of those is faster and less contested than a hardship motion, and one of them fits most situations.
Questions we get asked
How far into the plan do I need to be?
There's no fixed month. What matters is whether unsecured creditors have already received their Chapter 7 equivalent, which in a plan paying nothing to unsecured creditors can be satisfied early.
Can the trustee object?
Yes, and so can creditors. Expect the request to be scrutinized, particularly on whether modification was really impossible.
Will it show on my credit report differently?
It reports as a Chapter 13 discharge. Credit reporting doesn't distinguish the two types.
What if I'm denied?
You're back to the same choices: modify, convert, or dismiss. A denial isn't the end of the case by itself.
What to do next
Assemble the documentation of what happened, dates included, along with your current income. Then ask your attorney to run the liquidation test on your case, because if that number isn't already satisfied, the hardship route is closed and a different plan makes more sense.