Consumer Bankruptcy Committee

ABI Committee News

Discharge Calculations under the New Code for Those Refiling

by: Robert C. Meyer
Robert C. Meyer, P.A.; Miami

Recent events have made me wonder, what exactly can I do for a previously filed client (previous filer) who walks into the door and wants to file a new bankruptcy case? Now, under the new law, I must initially ask: When did you previously file, when was your discharge, or did you pay 100 Percent in your prior case? The importance of these questions has grown, as the new law constrains the right to obtain a discharge for the previous filer. And because the majority of my clients really only want one thing from my offices (the discharge), I must correctly analyze my capability of providing the previous filer with the product they seek to obtain.  
           
I charted out the many common factual situations to see if there is a simple formula. I concluded that the list was so large and the variables so diverse that no one pithy answer could provide the appropriate answer. Hence, I delved deeper into the question with as many hypotheticals as I could muster and concluded that a few obvious canons about the right to file exist in relation to those who previously filed bankruptcy:

  1. If the client's bankruptcy was dismissed within the past 180 days, the odds are that you cannot be allowed back in bankruptcy, but there are exceptions.  So a trip to PACER to find the reason for the dismissal will be warranted, as your client's ability to distinguish an ordinary  dismissal from the exceptions recited in §109(g)1 is not to be assumed, nor should it be.
  2. If the client completed the other bankruptcy less than two years ago, you may be able to file a chapter 13, as the two-year calculation is derived from the filing date to the date they want to file with you.
  3. If the client knows that the “two-year thing” is well over, then the issue is how many years ago was the client “in.” If less than eight years, think chapter 13; if more than eight, maybe chapter 7 – but then you have that “Form 22 thing” to do with them and they may be forced to go into chapter 13 anyway. Remember that the eight years is gauged from the date of original filing to the new filing – 11 U.S.C. §727(a)(8).
  4. The rule of three is good even if there is the old problem – conversion. If the case was filed more than eight years ago, but converted within eight years, you may ponder whether the debtor filed another chapter 7 and whether the conversion date established a new “commencement” date as identified in 11 U.S.C. §727(a)(8). The answer is that the original commencement date is the only commencement date. In re Czikalia, 2000 Bankr. LEXIS 2063 (Bankr. Idaho 2000) citing 6 Collier on Bankruptcy §727.11[2] (15th Ed. Revised 1999), and Resendez v. Lindquist, 691 F.2d 397, 399 (8th Cir. 1982); Riske v. Lyons (In re Lyons), 162 B.R. 242, 243-44 (Bankr. E.D. Mo. 1993); In re Burrell, 148 B.R. 820, 822 (Bankr. E.D. Va. 1992) [Note: all of these cases were under the pre-BAPCPA 6-year rule of §727(a)(8).]
Below, I deliver a better-than-nothing-at-all chart to show the different choices afforded to previously-filed clients.

SYNOPSIS

File?

Discharge
CH 7

Discharge CH 13

Comments

Ch 7 w/n 180 days
and DISMISSED

NO

No – §109(g)

No – §109(g)

The dismissal has to be either: (1) willful failure to abide court orders, or (2) voluntarily dismissed after stay relief requested.

CH7 w/n 180 days
and DISCHARGED

YES

No – 
§727(a)(8)

No - 
§1328(f)(1)

Gives the client time to gather retainer.

Ch 7 181 days to 2 years
and DISCHARGED

YES

No –
 §727(a)(8)

No – 
§1328(f)(1)

Rule of thumb – if less than years, bankruptcy is not for discharge, but may be used for right to reinstate mortgage and obtain stay.

Ch 7 or 11 w/n 2-4 years
and DISCHARGED

YES

No –  
§727(a)(8)2

NO – 
§1328(f)(1)3

In Ch 13, the 2 years is measured from filing date of old case to filing date of new case.

Ch 7 or 11 w/n 4+ to 8 years
and DISCHARGED

YES

NO –
§727(a)(8)

YES – 
§1328(f)(1)

In Ch 13, filing to filing is measurement.

Ch 7 or 11 more than 8 years
and DISCHARGED

YES

YES –  
§727(a)(8)

YES – 
§1328(f)(1)

Discharged from old case to date of filing new case must be 8 years under 
§727(a)(8).

Ch 12 or 13 w/n 180 days
and DISMISSED

NO

NO –  §109(g)

NO – §109(g)

The dismissal has to be either: (1) willful failure to abide court orders, or (2) voluntarily dismissed after stay relief requested.

Ch 12 or 13 181 days to 2 years

YES

NO – 

§727(a)(9)4

NO –
 §1328(f)(2)

Still can file – but no discharge.
Use to save the house or more importantly obtain a stay – but know the exceptions to the stay rule!

Ch 12 or 13 2+ to w/n 6 years

YES

NO –
 §727(a)(9)5

YES
 §1328(f)(2)

Looks like 13 is the only chapter to think about.

Ch 12 or 13 6-8 years

YES

YES –
 §727(a)(9)6

YES –
 §1328(f)(2)

Again, measurement is from date of discharge of old case to filing date of new case – if you are thinking of a chapter 7.

Chapter 13 only looks from filing date of old case to filing date of new case.
1 I ignore the recent (but probably soon to be no longer an issue of publication) decisions where the credit counseling failure provides dismissal of the case but is treated as not being a “case” or a “dismissal” for purposes of refiling or implementing the stay under §362 as reviewed in the cases of In re Calderon, 2006 WL 871477 (Bankr. S.D. Fla. 3/8/06), or In re Salazar, 2006 WL 827842 (Bankr. S.D. Tex. 3/29/06).
2 If you are thinking of filing a chapter 11 to get around this, §1141(d)(3)(C) states that the rules for chapter 7 apply to chapter 11. Hence, there is no loophole.
3 But if you pay 100 Percent, the issue is moot.
4 Unless 100 Percent plan  (§727(a)(9)(A)).
5Unless 100 Percent plan (§727(a)(9)(A)).
6 Doesn’t matter at this point in time if payments were 100 Percent or less.