Time Periods Between Bankruptcy Discharges

Current (Second or Subsequent) Case Chapter:

Prior (First) Case:

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

4 years

2 years

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 was filed in the first case.

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 case on December 1 2017, exactly 7 years after the first Chapter 13 case was filed, and only 3 years after the first 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 Chapter 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 provides 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 the first case was converted to another chapter controls. As a result, the majority view is that Billy Bob is not entitled to a discharge in the second 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 rule cases since 2005; four year rules applies but a literal application of the words “filed under” to converted cases 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 second 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 fact that the majority of courts that have ruled on this issue concede that a literal application of the words “filed under” mean that the required gap period between cases should start on the date the first case was filed, and the language of the statute in not ambiguous.