If you are considering filing for a personal bankruptcy, your options are usually a Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is a liquidation bankruptcy, where assets are inventoried and sold to pay off some of your debts and then you receive a discharge of the rest of the unsecured debt. Chapter 13 is a reorganization bankruptcy, where a person will agree to make monthly payments for 3-5 years and then the remaining debt will be discharged. Often, people would prefer to do the Chapter 7 bankruptcy, but if you do not meet the qualifications, Chapter 13 may be your only option. Usually, people who file for Chapter 13 bankruptcy can successfully keep up with the repayment plan, but sometimes things change and they are no longer able to make those required payments. That’s when the Chapter 13 hardship discharge comes into play.
What is the Chapter 13 Hardship Discharge in Aurora and Parker?
Let’s say you filed your Chapter 13 bankruptcy petition and the judge accepted your repayment plan. You make your payments faithfully for a while until something happens and you can no longer pay as required. This is when you can request the court grant you a Chapter 13 hardship discharge. Basically, the court would acknowledge your circumstances and just discharge your remaining debt. You would no longer have a repayment plan. The hardship discharge is not just easily handed out though. You have to provide solid evidence that your circumstances have significantly changed.
What Conditions Must Be Met to Receive a Chapter 13 Hardship Discharge in Centennial?
The Bankruptcy Court will only grant a Chapter 13 hardship discharge if the following conditions are met:
The change in circumstances is beyond the control of the debtor;
Creditors have received the equivalent of what would have been received through a Chapter 7 bankruptcy; and
A repayment plan modification is not an option.
Examples of situations that may lead to a hardship discharge include:
Illness or injury resulting in an inability to work
Death of a significant other or a contributing member to the household, changing your monthly income
Cutting down hours at work to care for a sick child or loved one (long term only)
Getting fired from your job because of poor performance or an increase in debts due to poor spending habits would not make your eligible for the hardship discharge.