## Facts

- Thomas Edwards filed a Chapter 13 case on February 5, 1993 and confirmed a 36-month plan requiring $1,419.37 monthly payments (total $51,097.32) on June 10, 1993.
- Edwards funded the plan from income generated by his film-processing/video business.
- After confirmation, increased competition reduced business revenue; the business deteriorated and failed.
- Edwards experienced depression requiring medication and his marriage ended during the period of financial decline.
- Edwards searched for work and later obtained sales employment, but his income left no meaningful disposable income for plan payments after basic living expenses.
- Edwards made 30 of the 36 plan payments, then defaulted in October 1995 with six payments remaining.
- The Chapter 13 trustee filed a notice of default and sought dismissal on February 7, 1996.
- Edwards sought extensions to complete payments, then moved on December 20, 1996 for a hardship discharge under 11 U.S.C. § 1328(b).
- The trustee objected, disputing that Edwards met the statutory requirements for a hardship discharge.

## Issues

1. Whether Edwards’s failure to complete plan payments was due to circumstances for which he should not justly be held accountable under 11 U.S.C. § 1328(b)(1).
2. Whether the value distributed under the plan was at least what unsecured creditors would have received in a hypothetical Chapter 7 liquidation under § 1328(b)(2).
3. Whether modification of the confirmed plan was not practicable under § 1328(b)(3).

## Decision

- The court granted Edwards’s motion for a Chapter 13 hardship discharge.
- The court found Edwards’s noncompletion resulted from post-confirmation events beyond his control, rather than bad faith or voluntary nonpayment.
- The court found creditors had received at least as much as they would have in a Chapter 7 liquidation because Edwards had little or no nonexempt property and substantial payments had already been made.
- The court found plan modification was not practicable because Edwards had no disposable income to support a feasible modified plan.

## Legal Principles

- A hardship discharge under 11 U.S.C. § 1328(b) requires proof of all three statutory conditions: (1) noncompletion due to circumstances for which the debtor is not justly accountable, (2) distributions at least equal to hypothetical Chapter 7 liquidation value, and (3) plan modification is not practicable.
- “Not justly accountable” is satisfied when post-confirmation events not reasonably foreseeable at confirmation and not within the debtor’s control make continued plan payments impossible.
- The § 1328(b)(2) liquidation comparison focuses on whether amounts actually distributed under the plan equal or exceed what creditors would have received in a Chapter 7 case, considering nonexempt asset value.
- Modification is “not practicable” when the debtor lacks sufficient disposable income for any confirmable modified payment structure, even after attempts to extend or adjust payments.

## Conclusion

The court granted a Chapter 13 hardship discharge because Edwards proved that uncontrollable post-confirmation business collapse and resulting financial incapacity prevented completion, creditors received at least the Chapter 7 equivalent, and no feasible plan modification was possible.


In re Edwards, 207 B.R. 728 (Bankr. N.D. Fla. 1997)