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 Wisconsin, as in other states, Chapter 13 bankruptcy allows debtors to keep their property and pay debts over time, usually three to five years. However, if a debtor encounters circumstances beyond their control that prevent them from completing their repayment plan, they may apply for a hardship discharge. The court may grant a hardship discharge if the debtor's inability to complete plan payments is due to factors such as illness or job loss, and if the debtor has already paid at least as much as creditors would have received under a Chapter 7 liquidation case. The hardship discharge is more limited than a standard Chapter 13 discharge and does not apply to certain types of debts, similar to those that would be excepted in a Chapter 7 case, such as certain taxes, student loans, alimony, child support, and debts arising from wrongful conduct. Chapter 12 bankruptcy, designed for family farmers and fishermen, also allows for a hardship discharge under similar conditions. Debtors considering a hardship discharge should consult with an attorney to understand the implications and the process involved.