Although a Chapter 13 bankruptcy debtor generally receives a discharge only after completing all payments required by the court-approved (confirmed) repayment plan, there are some limited circumstances under which the debtor may request the court to grant a hardship discharge even though the debtor has failed to complete plan payments. Such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor's control.

The scope of a Chapter 13 bankruptcy hardship discharge is similar to that in a Chapter 7 bankruptcy case with regard to the types of debts that are excepted from the discharge. A hardship discharge is also available in Chapter 12 bankruptcy if the failure to complete plan payments is due to circumstances for which the debtor should not justly be held accountable.

In Alaska, as in other states, Chapter 13 bankruptcy allows debtors to reorganize their debts and pay them off over a three to five-year period. However, if a debtor is unable to complete the payment plan due to circumstances beyond their control, they may be eligible for a hardship discharge. This type of discharge is less comprehensive than the discharge at the end of a successful Chapter 13 plan but is similar to the discharge one might receive in a Chapter 7 bankruptcy. It does not cover certain types of debts, such as certain taxes, student loans, alimony, child support, and debts arising from wrongful conduct. To qualify for a hardship discharge in Alaska, the debtor must demonstrate that the inability to complete the payment plan is due to circumstances beyond their control, the creditors have received at least as much as they would have in a Chapter 7 liquidation case, and modification of the plan is not feasible. Chapter 12 bankruptcy, which is designed for family farmers and fishermen, also allows for a hardship discharge under similar conditions. The specific application of these rules can vary, so it is advisable to consult with an attorney who is experienced in bankruptcy law in Alaska to explore this option.