Medical and Disability Hardship Discharge

Medical Disability as a Qualifying Circumstance

Medical disability is the most common and most successful basis for a hardship discharge under Section 1328(b). When a debtor becomes seriously ill or disabled during a Chapter 13 plan and can no longer work or earn sufficient income to make plan payments, courts routinely find that the debtor "should not justly be held accountable" for the failure to complete the plan.

What Courts Want to See

To support a hardship discharge based on medical disability, you should provide:

• Medical documentation -- Doctor's letter or report confirming the diagnosis, onset date, and expected duration or permanence
• Work restriction evidence -- Documentation from treating physician that the debtor cannot work or can only work in a limited capacity
• Income comparison -- Show the difference between pre-disability income and current income (disability benefits, reduced wages, etc.)
• Budget showing infeasibility -- Updated Schedule J showing that even with reduced expenses, plan payments are not possible
• Social Security disability determination -- If applicable, an SSDI or SSI approval is strong evidence of inability to work

Types of Medical Conditions That Qualify

Courts have granted hardship discharges for a wide range of conditions:

• Cancer requiring extended treatment or causing permanent disability
• Traumatic brain injury or spinal cord injury
• Stroke with lasting impairment
• Degenerative conditions (MS, ALS, severe arthritis)
• Mental health conditions severe enough to prevent employment
• Chronic pain conditions rendering the debtor unable to work

Medical Expenses as a Factor

Even if the debtor can still work, catastrophic medical expenses can justify a hardship discharge by consuming income that would otherwise go to plan payments. Large deductibles, out-of-network costs, and ongoing prescription costs can all be relevant.