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The Chapter 13 Hardship Discharge After confirmation of a plan, circumstances may arise that prevent the debtor from completing the plan. In such situations, the debtor may ask the court to grant a "hardship discharge." 11 U.S.C. § 1328(b).
The bankruptcy discharge order permanently forbids creditors from trying to collect a discharged debt. Some collection agencies and creditors attempt to collect debt despite a bankruptcy court order telling them to stop.
A Debt Release Letter is a letter written by a creditor to a debtor when their debt has been recouped in full. It establishes that a financial obligation no longer exists between the creditor and debtor.
You cannot remove a discharged debt from your credit report unless the information listed is incorrect. Even though you repaid the debt, partially or in full, or the lender stopped its collection attempts, the entry will remain on your report for seven years.
Terminology can get confusing because "hardship" and "dependency" discharges are often both loosely labeled "hardship." Specifically, a hardship discharge is when the financial needs of family member(s) require more than the military member can provide while remaining in the military.
The fastest way to obtain a copy is through the NPRC website. Expect a two to three week wait to receive requested records.
Once the debt is discharged by the bankruptcy court, the discharge permanently bars the creditor or debt collector from collection of the debt. Filing for bankruptcy can have long-term consequences so consult a bankruptcy attorney to learn more.
Courts can issue a discharge ruling when the debtor meets the discharge requirements under Chapter 7 or Chapter 11 of federal bankruptcy law, or the ruling is based on a debt canceling. A canceling of debt happens when the lender agrees that the rest of the debt is forgiven.