In previous posts, we have discussed how Chapter 13 bankruptcy may give you a chance to get caught up on your debt in an affordable way. To recap, the court would work with you to reorganize your debt so you would repay most or all of it within three to five years. Chapter 13 bankruptcy is intended to make it affordable for you and other Fort Lauderdale residents to pay your debt, and also takes into consideration your ability to pay.
However, there are some instances in which it might become impossible to continue making payments to your Chapter 13 trustee. For example, a serious accident may have disabled you and left you permanently unemployed. If you are unable to fulfill your Chapter 13 repayment obligations, you might be eligible for a hardship discharge. According to the Administrative Office of the U.S. courts, this would erase your dischargeable debts, such as medical or credit card debt.
To qualify for a hardship discharge, several requirements are necessary. You will first need prove that your situation is permanent or significantly long-term, and occurred due to circumstances beyond your control. You also must have repaid your creditors at least what they would have been paid through a Chapter 7 bankruptcy. Then, you would need to demonstrate that a bankruptcy modification to reduce your payments is impossible and impractical. In other words, you would not be able to continue your Chapter 13 payments if you are unable to generate any form of income.
Bankruptcy matters are complex and require more in-depth counsel than you will find in this blog; therefore, the information here should not replace the advice of a lawyer.