A recent life event has permanently changed my ability to make payments on my Chapter 13 bankruptcy repayment plan here in Arizona—what can I do?

At Curry, Pearson & Wooten, we often tell clients about the huge financial commitment that is an Arizona Chapter 13 bankruptcy repayment plan. It can be very difficult to predict your financial situation for the next year, let alone the three to five required. It is not uncommon for people to hit a bump in the road that takes them off the straight-and-narrow payment plan and pushes them back into the very situation from which they worked so hard to escape.

 

Fortunately, there is a way to alleviate yourself of the repayment plan commitment and some of your debt, called a hardship discharge. Just as a successfully completed repayment plan has limits on debt discharge, this particular type of discharge does not forgive you of all of your debts. Debts like your secured debts, priority debts, tax debt, and student loans will not be discharged, nor will debts you entered into in bad faith.

 

What a hardship discharge can do is remove you from the repayment plan and forgive your unsecured debt. Being granted a hardship discharge is challenging, however, and you will need to prove three things when you file your motion, including:

  • The hardship you are facing is permanent, and the burden is more than you can reasonable be held accountable for.
  • The payments you have made to your unsecured creditors is equal or greater to the amount they would have received had you filed for a Chapter 7 bankruptcy.
  • Your plan cannot be modified in any way to enable you to make payments.

It can be difficult to be granted a hardship discharge for your debts in an Arizona Chapter 13 bankruptcy, but with the right help, you can file your motion with confidence. Our experienced Phoenix, Arizona bankruptcy attorneys are here to help you, regardless of your circumstances—call us today at 602-258-1000 to find out what we can do for you.