When you choose the financial route of Chapter 13 bankruptcy, there is always the risk of your circumstances changing unexpectedly in the future. If that is the case, and you are unable to keep up on your Chapter 13 repayment plan, you may be able to apply for a Chapter 13 hardship discharge in Ohio.
Are you in a situation where you cannot make your monthly Chapter 13 payments? If so, check out this article, where we will be discussing what a Chapter 13 hardship discharge in Ohio is and what the requirements are.
What Is a Chapter 13 Hardship Discharge?
Chapter 13 bankruptcy is one of the most common bankruptcy options that allows you to take back control of your financial situation. Unlike other types of bankruptcy, it uses a repayment plan structure over a 3 to 5 year period. Whatever debts left remaining after your repayment plan is completed are usually discharged, allowing you to have a fresh start.
The downside to this structure is that you must be able to keep up on your monthly payments. This can be very difficult if your circumstances change, as your original repayment plan won’t reflect these changes. If this is the case for your situation, you may be able to apply for a Chapter 13 hardship discharge in Ohio.
A hardship discharge allows you to request that the court end your repayment plan early if you are the victim of unforeseen circumstances. If approved, the court would grant you a discharge so that you are not legally obligated to maintain your monthly repayments.
Keep in mind that even a court discharge does not include all debts, as you will most likely still be left with things like alimony, child support, and federal taxes.
Requirements to Qualify
To qualify for a hardship discharge in a bankruptcy, you must meet the qualifications that Ohio law has put into place. This includes three different elements, such as:
- Change in circumstances: You must be able to prove that you have experienced a change in circumstances that is beyond your control and has negatively impacted your finances. An example of this is if you sustain a serious injury or become chronically ill, severely limiting your ability to work.
- Plan modifications: Most people choose to have their payment plan modified if they are unable to keep up on their monthly payments. That is why one of the qualifications for a hardship discharge is that you are able to prove that there was no form of modification applicable to your situation.
- Adequate repayment: You will be much more likely to be approved for a hardship discharge if you have adequately repaid your creditors. Usually, this is the case if you have repaid your creditors the same amount as you would have had you qualified for Chapter 7 bankruptcy.
It is best to get the help of a Chapter 13 attorney in Ohio before moving forward with a Chapter 13 hardship discharge. An attorney will have a thorough understanding of these requirements and can help you get the evidence you need to prove that you qualify.
Common Situations That May Lead to Hardship Discharge
You may face some challenges when trying to qualify for a hardship discharge, as not all situations qualify as an unforeseen change in circumstances. For these changes to qualify, they must be outside of your control and present long-term issues that interfere with your ability to keep up on your financial obligations.
The most common example of a situation that can qualify you for a hardship discharge is if you are injured or experience a medical event. Serious injuries can impact your finances for months or years, and chronic illness or disability can be permanent. But there are other situations that could possibly qualify you for a hardship discharge, including:
- Job loss without reemployment options.
- Diminished earning potential.
- Death in the family.
How to Request a Hardship Discharge
The good news for Ohio residents is that requesting a hardship discharge is quite straightforward. You will need to file a motion with the bankruptcy court and provide supporting documentation to prove that you meet the qualifications. And in most cases, your request will be approved or declined quite quickly.
However, you must remember that creditors will be notified of this and have the right to object to your request. Creditors have the option of filing a lawsuit called an adversary proceeding for certain types of debts, and if they win, those debts will not be dischargeable.
A bankruptcy attorney can help you prepare your request and provide the supporting documentation to showcase why you need the hardship discharge. They can also help you navigate any issues that may come up if creditors object to an early discharge.
FAQ Section
Is a hardship discharge the same as a full discharge?
Not necessarily. A hardship discharge can come with limitations depending on the types of debts and whether or not the creditors object to the request. You also must be able to prove that you qualify for a hardship discharge since this is usually requested before you have finished your repayment plan.
Will all my debts be wiped out?
It depends on the types of debts that you have. Most, if not all, dischargeable debts will be discharged if you qualify for a hardship discharge. However, creditors can object to certain debt discharges, and you will still have to pay non-dischargeable debts, such as alimony and child support.
What happens if I don’t qualify?
Most people who don’t qualify for a hardship discharge can request that their Chapter 13 plan be converted to Chapter 7 bankruptcy. This is most often the case if your request was rejected due to owing money to unsecured creditors.
Hire a Bankruptcy Attorney in Ohio
If your Chapter 13 repayment plan is no longer realistic for your situation, you may be able to apply for Chapter 13 early discharge. Richard P. Arthur, Attorney at Law, has extensive experience handling bankruptcy cases in Ohio and can help you determine whether or not you qualify for Ohio bankruptcy hardship. To proceed with your case, contact us today at 937-254-3738 for a free consultation.