How do I obtain a hardship discharge in Chapter 13 Bankruptcy?

In order to obtain a hardship discharge in Chapter 13 Bankruptcy in New York, you must meet certain criteria. The most important is that your financial situation does not allow you to make your Chapter 13 repayment plan payments. Generally, this is determined by a calculation called the “best effort” test. The court will also look at whether or not your income is low enough compared to your expenses that you have a “realistic chance of succeeding” in the Chapter 13 plan. To determine this, the court will consider factors such as: your debts and assets, income, family size and expenses, the ages of any dependent children, and the amount of your disposable income (the amount of money you have after paying necessary expenses) related to the ability to pay creditors. If it is determined that meeting your repayment plan is impossible, you can apply for a hardship discharge. You must submit a motion to early termination of your plan and provide evidence to prove your eligibility. A judge will review the motion and make the final decision whether or not to grant the hardship discharge. If approved, your case will be dismissed and your debts will be erased. It is important to note that while a hardship discharge in Chapter 13 Bankruptcy may provide financial relief, it may also have an impact on your credit score, and can make it difficult to obtain credit in the future. Before filing for bankruptcy, it is recommended to speak to a qualified lawyer or financial advisor to weigh the pros and cons of your situation.

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