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Time Periods Between Bankruptcy Discharges

The table below specifies the the time period which must pass before a person may receive a bankruptcy discharge in consecutive bankruptcy cases.  The time period depends upon the chapter under which the current and previous cases were filed.

Current (Second or Subsequent) Case Chapter:

Prior (First) Case:

Controlling Statute

Ch. 7

Ch. 11

Ch. 13

Ch. 7

11 U.S.C. § 727(a)(8) & (9)

8 years

No time limit

6 years, unless the plan in the prior case paid 70% or more to unsecured creditors

Ch. 11

No time limit

Ch. 13

11 U.S.C. § 11328(f)

4 years

2 years

Filing Dates Control. All time periods start and end on the bankruptcy petition filing date for each case, except for cases converted from one chapter to another. The discharge date is always irrelevant.

Consecutive Ch. 7 Cases. If the debtor receives a Chapter 7 discharge in the first case, he will not be able to receive a discharge in a subsequently filed Chapter 7 case unless at least 8 years pass between the filing of the bankruptcy petition in the first and second cases.

Consecutive Ch. 13 Cases. If the debtor receives a Chapter 13 discharge in the first case, he will not be able to receive a discharge in a subsequently filed Chapter 13 case unless at least 2 years pass between the filing of the bankruptcy petition in the first and second case.

Ch. 7 Followed by Ch. 13. If the if the debtor receives a Chapter 7 discharge in the first case, and the second case is a Chapter 13 case, he will not be able to receive a discharge in the Chapter 13 case unless at least 4 years pass between the filing of the bankruptcy petition in the first and second case.

Ch. 13 Followed by Ch. 7. If the if the debtor receives a Chapter 13 discharge in the first case, and the second case is a Chapter 7 case, he will not be able to receive a discharge in the Chapter 7 case unless at least 6 years pass between the filing of the bankruptcy petition in the first and second cases.

Example. Assume that Billy Bob files for Chapter 7 bankruptcy on December 1, 2009. His discharge order is entered 4 months later on April 1, 2010.

Billy Bob files a second Chapter 7 bankruptcy case on December 2, 2017, 8 years and 1 day after the first case was filed.

Result. Under these facts, Billy Bob will be eligible to receive a discharge in the second case because the bankruptcy petition in the second case was filed more than 8 years after the bankruptcy petition was filed in the first case. It is irrelevant that the discharge order in the first case was entered by the Court less than 8 years after the bankruptcy petition in the first case was filed.

Converted Cases

 It is common for bankruptcy cases to be converted from one chapter to another at some point in the proceedings. For example, debtors that file under chapter 13 are required to propose a payment plan to repay part or all of their debts. If the debtor loses his job and can no longer make payments, the debtor can convert the chapter 13 case to a chapter 7 case in an attempt to discharge the debts that were not paid in the chapter 13 repayment plan, without making any further payment.

In converted cases, the law is unclear. The courts have disagreed whether the time period that must elapse between the first and second case starts when the when the debtor files the petition in the first case, or when the first cases is converted from one case to another.

Example. Assume that Billy Bob files for Chapter 13 bankruptcy on December 1, 2010. He proposes a 5 year plan to pay all of his debts in full. The Court approves the plan. In late November 2013 he loses his job and can no longer make any payments under his Chapter 13 plan. On December 1, 2014, Billy Bob files a notice exercising his right to convert the case to a Chapter 7 case. His discharge order in the Chapter 7 case is entered four months later on April 1, 2014.

Billy Bob files a second Chapter 13 bankruptcy case on December 1 2017, exactly 7 years after the first Chapter 13 case was filed, and only 3 years after the case was converted from Chapter 13 to Chapter 7.

Result. It is unclear whether Billy Bob will be entitled to receive a Chapter 13 discharge in the second case. Unfortunately, there is a split in the court decisions in this type of fact pattern, and there is no binding authority for any bankruptcy judge in the Greater Houston area.

Majority View. Most bankruptcy Courts confronted with this fact pattern have ruled that in converted cases, the starting date for determining whether Billy Bob has satisfied the 4 year refiling limitation starts on the date that the Ch. 13 case was converted from Chapter 13 to Chapter 7 (December 1, 2014), not on December 1, 2010, the date on which the Chapter 13 petition was filed. Although the relevant statute clearly provide that the date that the filing date of the petition in the first case controls, the majority of Courts have ignored the text of the statute and have held that the date that first case was converted to another chapter controls. as a result, the majority view is the Billy Bob is not entitled to a discharge in the Chapter 13 case filed on December 1, 2017 because it was filed less than 4 years after December 1, 2014, the date that the first case was converted to Chapter 7. See, Leavitt v. Finney, 486 B.R. 177 (9th Cir. BAP 2013) (listing majority rules cases since 2005; four year rules applies; literal application of the words "filed under" to the facts of the case is contrary to Congress' intent to create more stringent discharge rules.)

Minority View. The minority view would hold that Billy Bob is entitled to a discharge in the Chapter 13 case filed on December 1 2017 because the text of the relevant statute starts the required gap between cases on the date the bankruptcy petition in the first case was filed, not on the date it was converted to another chapter. See, Babin v. Hamilton, 383 B.R. 469 (Bankr. W.D. Ark. 2008); Wilkerson, 507 B.R. 742 (Bankr. Kan. 2014).

Weber Law Firm attorneys believe that the minority view is better reasoned. This view is based on the facts that the majority of courts that have ruled on this issue concede that a literal application of the words "filed under" required the required gap period to start on the date the first case was filed, and the language of the statute in not ambiguous.

 

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