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Hardship discharge allowed in bankruptcy case due to a stroke

South Carolina residents may be interested in a ruling by a U.S. bankruptcy court from December 2016 that allowed a hardship discharge in a Chapter 13 case. The case involved a man who suffered a stroke while he was paying off debts pursuant to the court-approved plan. The court decided the man is eligible for a hardship discharge, despite arguments from the trustee.

The debtor and his wife both suffer from illnesses that pre-dated the Chapter 13 filing. The debtor's doctor advised him to cease his work as an attorney after he had a stroke. The trustee argued that because of the debtor's state of health at the time of the bankruptcy filing, the inability to work was foreseeable. But the court decided that the stroke and subsequent inability to work satisfied part of the criteria for hardship in the Bankruptcy Code.

Section 1328(b) of the Bankruptcy Code states that in order to receive a hardship discharge, the debtor must be unable to make payments, that creditors must have already at least as much under Chapter 13 than they would have under Chapter 7, and that modification of the payment plan is not a viable solution. The decision of the court was that the debtor had satisfied all three criteria.

Chapter 13 is a debt-relief option that allows people who qualify to restructure their financial obligations under an affordable payment plan for a period of three to five years. Bankruptcy attorneys will tell their clients that Chapter 13 is only suitable for people who have a regular source of income, however.

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