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 York, as in other states, Chapter 13 bankruptcy allows debtors to reorganize their debts and pay them off over a three to five-year period. Typically, a discharge is granted after the debtor completes all payments under the repayment plan. However, under certain limited circumstances, a debtor may qualify for a 'hardship discharge' if they are unable to complete their payment plan due to circumstances beyond their control. To be eligible for a hardship discharge, the debtor must demonstrate that the inability to complete payments is due to factors such as illness or a change in economic circumstances, and that creditors have received at least as much as they would have in a Chapter 7 liquidation case. The debtor must also be unable to modify the plan. The scope of debts discharged under a hardship discharge in Chapter 13 is similar to those in a Chapter 7 case, meaning that certain types of debts like alimony, child support, certain taxes, and student loans typically cannot be discharged. This provision is also applicable in Chapter 12 bankruptcy, which is designed for family farmers and fishermen.