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 New Hampshire, as in other states, Chapter 13 bankruptcy allows debtors to reorganize their debts and pay them off over a three to five-year period. If a debtor is unable to complete the payment plan due to circumstances beyond their control, they may apply for a hardship discharge. The court may grant this discharge if the debtor's inability to pay is due to factors such as illness or a change in financial circumstances that is not the fault of the debtor. The hardship discharge is more limited than a full Chapter 13 discharge and is similar in scope to a Chapter 7 discharge, meaning that certain debts like alimony, child support, certain taxes, and student loans typically cannot be discharged. Chapter 12 bankruptcy, which is designed for family farmers and fishermen, also allows for a hardship discharge under similar conditions. To obtain a hardship discharge, the debtor must demonstrate that the circumstances that led to their inability to complete the payment plan were beyond their control and that creditors have received at least as much as they would have received in a Chapter 7 liquidation case.