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Excerpts from
Bankruptcy Basics
A Public Information Series of the Bankruptcy Judges Division
Administrative Office of the United States Courts
APRIL 2004
Revised Second Edition

Contents

Introduction

The Discharge in Bankruptcy

Chapter 7. Liquidation Under the Bankruptcy Code

Chapter 13. Individual Debt Adjustment

Background

How Chapter 13 Works

Making the Plan Work

The Chapter 13 Discharge

The Chapter 13 Hardship Discharge

Chapter 11. Reorganization Under the Bankruptcy Code

Chapter 12. Family Farmer Bankruptcy

Chapter 9. Municipality Bankruptcy

SIPA. Securities Investor Protection Act

Bankruptcy Terminology


Bankruptcy BASICS

Chapter 13

Individual Adjustment of Debt

THE CHAPTER 13 HARDSHIP DISCHARGE

After confirmation of a plan, there are limited circumstances under which the debtor may request the court to grant a "hardship discharge" even though the debtor has failed to complete plan payments. 11 U.S.C. 1328(b). Generally, such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor's control and through no fault of the debtor, after creditors have received at least as much as they would have received in a chapter 7 liquidation case and when modification of the plan is not possible. Injury or illness that precludes employment sufficient to fund even a modified plan may serve as the basis for a hardship discharge. The hardship discharge is more limited than the discharge described above and does not apply to any debts that are nondischargeable in a chapter 7 case. 11 U.S.C. 523.