How to Get Out of Chapter 13 Bankruptcy

by S. Herlihy ; Updated July 27, 2017

One of the most common forms of bankruptcy filing is chapter 13 bankruptcy. This creates a method for the debtor to repay any creditors at an increased time frame that usually runs from 3 to 5 years. During the process, one may be unable to do so because of various reasons. There is a legal means of freeing oneself from the obligations of a chapter 13 bankruptcy.

Step 1

Contact a tax lawyer. In order to file the initial motion for chapter 13 bankruptcy, you will need to consult with a tax lawyer. In order to have the bankruptcy terms revised, you will need to work with one again. Consider choosing the same lawyer who worked with you on the first motion. He may fully understand your needs and be capable to best serve you.

Step 2

Contact your local court system. The system will tell you which forms you need in order to begin this process.

Step 3

Apply for a hardship discharge. A hardship discharge is a legal request to have the terms of debt repayment reduced or relieved altogether. During the process of working through a chapter 13 bankruptcy, your repayments will be supervised by an outside observer who is a member of the court, such as a judge. The outcome of the discharge request will be determined by the person who is in charge of supervising your repayments. All discharge requests are made through the court system. Your tax lawyer will make sure all paperwork required for a hardship discharge is filled out completely.

Step 4

Demonstrate to any creditors that they have received adequate funding. This can be done by illustrating how much money they would have received had you sold off all your assets before you applied for chapter 13 protection. Proof must be made that creditors would have received as much money then as they have received after you filed for bankruptcy and began repayments.

Step 5

Show court officials your inability to pay even a greatly reduced sum of money as repayment. This inability may stem from ongoing medical bills as well as long-term job loss. Have all documentation at hand to demonstrate your ongoing financial hardship including any medical bills as well as proof of reductions in salary or job layoffs.

Step 6

Establish any financial hardships that have happened since you filed for chapter 13 bankruptcy are not your fault. Situations under your control, such as fathering more children, going through a divorce or being fired for misconduct, will not let you qualify for a hardship discharge.

Step 7

File again if the initial motion is not granted. You have the right to do so under chapter 13 bankruptcy laws.