6th Circuit on Chapter 13 Discharge
By Kurt O'Keefe, Attorney at Law on Dec 29, 2008 in Chapter 13 Bankruptcy
The 6th Circuit Court of Appeals has reversed bankruptcy Judge Rhodes ruling on getting a Chapter 13 discharge.
There is no discharge for a Chapter 13 case filed within 4 years of a prior Chapter 7 case, per 11 USC 1328(f).
The bankruptcy court had held the 4 years ran from the date of the discharge, not the date the prior Chapter 7 case was filed. The 6th Circuit now rules that the 4 years runs from the date the prior Chapter 7 was filed.
This is helpful to debtors, as it allows consumers to file sooner after a previous case, and still get a discharge. In re: Sanders, case # 08-1201 arising out of a Detroit Chapter 13 case in which the Trustee wanted to deny the debtor a Chapter 13 discharge.
The 6th is the first Circuit to rule on this precise issue.
This debtor filed his Chapter 7 on July 29, 2002, so did not get a discharge until February 5, 2003.
His subsequent Chapter 13 case was filed January 5, 2007, 4 years after the filing of the prior Chapter 7, but less than 4 years after the discharge was issued in that case.
The bankruptcy court denied the Trustee’s objections to confirmation, but granted the objection to discharge.
The District Court reversed.
The parties agreed that the end date was the filing of the Chapter 13 case, so the only issue was what was when the 4 year period began.
Hopefully, other circuits will follow this plain meaning decision.
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