The ultimate goal of every plan is discharge of all debts. Debtors pay trustees monthly payments for a term of months, and if calculations are correct, all debts will be paid according to the terms of the plan. Once creditors are paid, including partial payment approved by U.S. bankruptcy courts, debts are discharged.
Occasionally, U.S. bankruptcy courts grant debtors a hardship discharge. If debtors provide substantial performance under the terms of the plan, then suffer debilitating illness or job loss, U.S. bankruptcy courts may modify the plan so that payments previously made are considered full performance.
Debtors may also convert Chapter 13 plans to Chapter 7 liquidation. Conversion is a popular option for debtors facing a motion to dismiss for failure to make plan payments. Many times conversion results from the loss of a job, illness or substantially changed circumstances.