Under Chapter 13 of the bankruptcy code, a debtor will make payments into a plan that pays some or all of her debts, and which is based on her income at the time the plan is confirmed by the bankruptcy court.
The question that often arises from my clients is, “what happens if I can no longer make payments in my Chapter 13 plan?”
Not surprisingly, the Bankruptcy Code has an answer for that. If you can no longer make plan payments, the Code allows your attorney to ask for a hardship discharge. A hardship discharge is usually only allowed if you can’t make payments for a reason beyond your control, and must arise from a serious deterioration in your financial circumstances, such as a disability that prevents you from working. In addition, a hardship discharge is only allowed if a plan modification isn’t possible.
A hardship discharge is obviously a significant advantage over having your bankruptcy dismissed because you fail to make payments, and if you find yourself unable to make plan payments, you should contact your attorney as soon as possible.
