I beat the Chapter 13 trustee on what’s necessary to get a hardship discharge the other day. The contested issue was essentially whether the general rotten state of the economy was a circumstance beyond the debtor’s control, justifying a hardship discharge.
Over the years of a Chapter 13 plan, lots of life events can threaten the plan. Our clients usually aren’t in the best of shape, physically or financially, for the long haul. When they hit a bump and the wheels absolutely come off the bus, what do you do?
My client was an independent trucker with a fistful of non dischargeable taxes to pay through the plan. Three years into the plan, competition in the truckng industry had increased; the cost of fuel had risen; and profit margins were miniscule.
Getting Out Of Chapter 13 Without Dismissal or Conversion
The debtor who becomes disabled, chronically ill, is widowed or even dies is the poster child for a hardship discharge. In contrast, though, to the reported cases where a hardship discharge was granted, my guy was youngish, healthy, and choosing to abandon his occupation because it didn’t pay.
The trustee argued that the mere fact that jobs that would pay enough to complete the plan weren’t available wasn’t enough. The sub text in the argument was that the trustee’s office would be swamped with hardship discharge motions if job loss was an acceptable reason the debtor couldn’t complete the plan.
It took two hearings and an attentive judge, but I got a finding that, on the facts of my particular case, the economic downturn was a circumstance for which my client “should not justly be held accountable”.
Leverage The Power Of The Hardship Discharge
The case is cratering, and your client needs relief – now. Conversion is just going to drag out the process and make your client go through another round of trustee hearings. Dismissal is simply not a good option.
Do you know how to navigate the hardship discharge, or does your client end up getting the short end of the stick?
This seems like a good place to remind you of the downloadable session I’ve got available on hardship discharge (from now until Friday, February 17, 2012 at 5:00pm Eastern time the session, normally priced at $67 each, can be yours for 10% off when you enter the promotional code LOVE at checkout). It comes complete with an audio segment as well as forms you can start to use immediately.
If it’s not your day to make a purchase, that’s not a problem. The session is there when you’re ready, though not necessarily at this price. I encourage you to spend your time working through the issues so you’re ready the next time a Plan skids off the road and you need an effective means of cleaning up the wreckage.
Image courtesy of WSDOT.