Chapter 13 Early Hardship Discharges
Louisville Kentucky
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Often a Debtor is in the process of losing a job or becoming disabled and
may need to file as a Chapter 13 but not have the ability to complete a Chapter 13
plan. The Debtor may start their Chapter 13 with health
problems and eventually obtain the early discharge or convert to
a Chapter 7.
This allows the debtor to file now and immediately get the
protection
they need but delay getting the discharge until all of the medical debts are in.
If the debtor filed a Chapter 7 bankruptcy less than 8 years ago the
debtor may be waiting out until he can file as a Chapter 7.
Medical debt incurred after filing a Chapter 13 is simply added
to the petition and those medical debts may be discharged later. The Chapter 13 Debtor can ask the court for an
early hardship discharge
under 11 USC §1328(B) when:
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The Debtor's failure to complete plan payments is due to
circumstances beyond the Debtor's control through no fault of the debtor;
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Creditors
have received at least as much as they would have received in
a chapter 7 liquidation case; and
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Modification of the plan is not possible.
This allows a Debtor a huge benefit over a Chapter 7 or debt
settlement if he can't complete a plan. To get the hardship discharge a debtor has to supply
proof that they qualify for a Chapter 13 hardship discharge under
11 U.S.C. § 1328(b). Generally, such
a discharge is available only if: (1) the debtor's failure to complete plan
payments is due to circumstances beyond the debtor's control and through no
fault of the debtor; (2) creditors have received at least as much as they would
have received in a chapter 7 liquidation case; and (3) modification of the plan
is not possible. Injury or illness that precludes employment sufficient to fund
even a modified plan may serve as the basis for a hardship discharge. The case
that explains how to get a Chapter 13 early hardship discharge is
In re Bandilli, 231 BR 836, (BAP 1st Circuit 1999).
The six Bandilli criteria are:
1.
Whether the Chapter 13 Debtor has presented substantial evidence that he or
she had the ability and intention to perform under the Chapter 13 plan at the time of
confirmation
2.
Whether the Chapter 13 Debtor materially performed under the plan from the
date of confirmation until the date of the intervening event or events
3.
Whether the intervening event or events were reasonably
foreseeable at the time of confirmation of the Chapter 13 plan
4.
Whether the intervening event or events are expected to continue
in the reasonably foreseeable future
5.
Whether the Chapter 13 Debtor had control, direct or indirect, of the
intervening event or events
6.
Whether the intervening event or events constituted a sufficient
and proximate cause for the failure to make the required payments.
To file Bankruptcy: 1
Download our manual 2
Download the list of required documents
3 fill
out our online filing bankruptcy intake 4
Take your class 5
make your appointment
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