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 Oregon, 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 a hardship discharge if the debtor's inability to complete payments is due to factors such as illness or a change in financial circumstances, and if creditors have received at least as much as they would have in a Chapter 7 liquidation case. Additionally, the debtor must not be at fault for the failure to complete the payment plan. The hardship discharge in Chapter 13 is more limited than a full discharge and does not apply to certain types of debts, similar to the restrictions in a Chapter 7 case. This type of discharge is also available in Chapter 12, which is designed for family farmers and fishermen, under similar conditions where the debtor cannot complete payments due to circumstances beyond their control and for which they should not justly be held accountable.