rules on sucessive bankruptcy discharges clarified

timeMassachusetts bankruptcy attorneys got an important clarification recently from U.S. Bankruptcy Court judge Melvin Hoffman on how much spacing there must be between bankruptcy cases for a debtor who wants a Chapter 13 discharge, but who has previously received a Chapter 7 discharge.

This situation involves section 1328 (f) of the bankruptcy code, which bars a second Chapter 13 discharge if a debtor has filed a previous case under Chapter 13 within four years, or a previous case under Chapter 7 within two years.

In the Johnson case, decided on March 11, 2013, the debtors had filed a Chapter 13 case in 2008, converted in to Chapter 7 in 2009, and got their Chapter 7 discharge in April, 2010. Then they filed a follow-up Chapter 13 case in August of 2012, and petitioned the court for another discharge.

Judge Hoffman made two important rulings in this case. First, he determined that the time periods involved should be calculated by measuring from the filing date of the first case to the filing date of the second, ignoring both the dates of conversion and the date the first discharge was issued.

Second, he ruled that the original Chapter of the filing, not the chapter of conversion controlled which time period to apply.

In this situation, that was bad news for the debtors, who had filed their second case just a few days short of four years from the first one. Because the first case was filed under Chapter 13, the judge applied the four year rule, and denied any discharge in the second case.

 

By Doug Beaton

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