Hardship Discharge in Chapter 13 Bankruptcy: What is It?


If you're dealing with excessive personal debt, and you are considering bankruptcy as a solution, you will have two options: Chapter 7 bankruptcy erases your liability for most debts, so you will not be required to pay them back; Chapter 13 bankruptcy, conversely, allows you to pay your debts over an extended time period (typically three to five years), so you can satisfy your debt obligations while still being able to keep part of your income for reasonable living expenses.

Many types of personal property are considered exempt under Chapter 7 bankruptcy (meaning that you will get to keep it), you will typically lose other types of property, such as your home and your car with values that exceed the amounts permitted under your applicable state (or federal) laws. Because these important assets are not exempt, many people elect to file for Chapter 13 bankruptcy protection instead this way, these assets won't be taken and liquidated by the bankruptcy trustee.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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