Mrs. Brown shot her husband and complained that the decrease in family income after his death made Chapter 13 payments a hardship. When she requested a discharge without making all the required payments, the bankruptcy judge asked the widow Brown to explain herself. Since she was unwilling to testify under oath about the shooting, the court would not grant the Section 1328(b) discharge on hardship grounds. The case of In Re Brown, Missouri Bankruptcy Case No. 07-43738-13-jwv, 2009 Bankr. Lexis 640, March 24, 2009, illustrates the requirements for special circumstances discharge in Chapter 13.
The Browns were making payments on a Chapter 13 plan funded by income from both Mr. & Mrs. Brown. However, since Mr. Brown contributed more than 80% of the couple’s income, his death made it impossible for Mrs. Brown to keep up with required monthly payments. While the bankruptcy code, under 11 USC Section 1328(b), allows a discharge to debtors who have not completed all payments, there are some conditions.
After a hearing on the motion for discharge, the bankruptcy judge found that two of the three requirements for an early discharge were met. It would not be practical for the remaining debtor to modify the plan since she only received income of $500 per month. Further, the creditors had already been paid as much as they would have received in Chapter 7 liquidation. Unfortunately, the widow Brown’s reluctance to testify as to the details of the shooting provided no basis for the court to find that she could not be held accountable for the circumstances she found herself facing.
The moral of the story is clear. If you must shoot your husband, do not expect the bankruptcy court in Missouri, the “Show Me State,” to consider your new status as a widow to be grounds for hardship discharge of your chapter 13. I doubt the result would be different in the Oregon bankruptcy court.
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