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In re Shifflet (Case No. 05-50345) 12/14/2007

The debtors filed an application for a hardship discharge under 11 U.S.C. § 1328(b) and (c).  After confirmation of the debtors' Chapter 13 plan, the female debtor was diagnosed with a rare, chronic autoimmune neuromuscular disease which caused her to quit her job due to the resulting muscle weakness.  Under Section 1328(b), Chapter 13 debtors can obtain a discharge after confirmation even though complete payments under the plan have not been made, so long as the debtors show that the following three essential criteria are satisfied: (1) the failure to complete plan payments is due to circumstances for which the debtors cannot justly be held accountable; (2) the value of property distributed under the plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under chapter 7 of this title on such date; and (3) modification of the plan is not practicable.  See 11 U.S.C. § 1328(b)(1)-(3).  The Court denied the debtors' application for a hardship discharge, holding that although the female debtor's illness was an unforeseeable economic circumstance, the debtors have failed to establish that they have made every effort to overcome their situation by failing to present evidence that would preclude the possibility of improvement in the female debtor’s health or the possibility of finding suitable alternative employment.

Date: 
Friday, December 14, 2007
Category: 
Discharge
Chapter: 
13