A commenter posed an interesting scenario. She received a Chapter 7 discharge in 2002. Since then, she rebuilt her credit and was able to get into her home. Unfortunately, she ended up with a subprime mortgage with payments that are high. Those payments were manageable when she was making $80,000 a year. But she recently lost her job. Now those payments seem daunting. So, the question is, can she seek bankruptcy protection again?
Chapter 7
When the bankruptcy law changed in 2005 (BACPA or BARF, depending on your perspective), among the changes was to § 727: “(a) The court shall grant the debtor a discharge, unless– * * * (8) the debtor has been granted a discharge under this section * * * in a case commenced within 8 years before the date of the filing of the petition. Before October 17, 2005, it was 6 years.
At first glance, it would spear that our commenter would not be entitled to file. She received her discharge in 2002 and it’s 2007. It’s only 5 years. However, we do not know when the case was actually filed, and this is an important fact.
The measuring point is not she received a discharge in 2002, but when she actually filed the case. The code prohibits the entry of a discharge if the debtor received in a discharge in a case commenced within 8 years before the date of the filing of the petition. Thus, the measuring point begins when the first case was filed and ends when the second case was filed.
But is that reading of the statute reasonable? Let’s take a look at how Congress changed Chapter 13.
Chapter 13
Congress added a new subsection to § 1328. Pursuant to § 1328(f), “the court shall not grant a discharge of all debts provided for in the plan or disallowed * * * if the debtor has received a discharge– (1) in a case filed under chapter 7 * * * during the 4-year period preceding the date of the order for relief under this chapter ….”
So a debtor cannot get a Chapter 13 discharge if they received their discharge in a case filed during the 4-year period preceding the filing of the order for relief. While we do not know when that case was filed, we do know that it was in 2002. Thus, the commenter could benefit from a Chapter 13 (assuming other factors support such a filing, such as income, expenses and the ability to present and comply with a confirmable plan).
This is important to know. Many times people who have been through bankruptcy erroneously assume that bankruptcy relief may not be available to them. By pointing out these provisions of the code, I hope I have demonstrated that that assumption is not always accurate. Of course, the only way you can determine whether a bankruptcy filing is right for you is to speak with a bankruptcy attorney.
Please comeback for a follow up post where I’ll present the same scenario, except I’ll discuss the law as if the commenter received a Chapter 13 Discharge in 2002.
Related posts:
- Filing Bankruptcy: Timing can be Everything in Chapter 13
- Why Bankruptcy Lawyers Require Fees Before Filing
- Chapter 13 for Chapter 7 Debtors
- House Passes Bill, Filing Fees Increasing
- Late Filing of Documents = Dismissal
Tags: Bankruptcy, Chapter 11, Chapter 13, Chapter 7, Discharge of Debts
