What is the difference between a hardship discharge and a regular discharge in Chapter 13 Bankruptcy?
A hardship discharge is an action that is taken by a bankruptcy court when the debtor is unable to complete all of their required payments and benefits under a Chapter 13 repayment plan. A regular discharge is the relief from the debtor’s debt which the debtor receives at the end of the repayment plan. In Virginia, a Chapter 13 bankruptcy allows an individual to retain most of their property while repaying creditors over a three to five year period. During this time, the debtor must make payments to the bankruptcy trustee who distributes the payment to creditors as stated in the repayment plan. If the individual is unable to make all payments within the repayment period, a hardship discharge may be applicable which eliminates any remaining debt the debtor still owes after the completion of the repayment plan. On the other hand, a regular discharge is the relief from the debtor’s debt which the debtor receives at the end of the repayment plan. This relief happens once all payments and benefits under the repayment plan have been completed and the bankruptcy court is satisfied that all obligations have been fulfilled. In short, a hardship discharge is a legal action taken by a bankruptcy court because the debtor was unable to complete their repayment plan while a regular discharge is a debt relief given to the debtor when they have successfully completed the repayment plan.
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