Tag: hardship discharge

Bankr. E.D.N.C.: In re Meek- Hardship Discharge under 11 U.S.C. § 1328

Summary:

The Male Debtor, who was the sole provider for the family, secured new employment in Colorado, and soon thereafter, the debtors and their children relocated accordingly. Subsequently, the Debtors sought a hardship discharge under 11 U.S.C. § 1328(b).

The Bankruptcy Court held that § 1328(b)(1) requires that the debtors’ inability to continue making plan payments must due to circumstances “beyond the debtors’ control.” The Debtor’s decision to relocate, particularly with increased income and job security, were not circumstances that justified a hardship discharge.

Commentary:

While there are some reasons for seeking a hardship discharge, such as where a junior mortgage was stripped off, it would usually seem that conversion to Chapter 7 seems a far better option, as the “bad faith” or “abuse” standards of U.S.C.… Read More

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Bankr. E.D.N.C.: In re Marshall (Deceased)- Hardship Discharge, Death and Taxes

Summary:

The Debtor died during her Chapter 13 case, still owing more that $165,000 in nondischargeable taxes to the IRS. Following the severance of her co-debtor/husband’s case, the Debtor’s attorney then filed a Motion for a Hardship Discharge pursuant to 11 U.S.C. § 1328(b). While stating that the death of a debtor can constitute a circumstance precluding completion of plan payments for which a debtor should not be held accountable. See In re Bond, 36 B.R. 49 (Bankr. E.D.N.C. 1984), the bankruptcy court here held that the evidence indicated the Debtor “deliberately avoided paying taxes on her income prior to filing the petition, an act of bad faith, which in the Court’s discretion, is undeserving of a hardship discharge.”

For a copy of the opinion, please see:

Marshall (Deceased)- Hardship Discharge, Death and Taxes.pdf Read More

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