§ 156.2     Limitations on Successive Discharges
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 156.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

BAPCPA imposes new temporal limits on discharge in a Chapter 13 case when a debtor received a discharge in a prior bankruptcy case. The limits in § 727(a)(9) on granting a Chapter 7 discharge when the debtor was discharged in a Chapter 13 case within six years were not changed by BAPCPA.1

[2]

BAPCPA enacted for the first time a limitation on the granting of a Chapter 13 discharge when the debtor received a discharge in a prior bankruptcy case. New § 1328(f) provides:

(f) Notwithstanding [§ 1328(a) and (b)], the court shall not grant a discharge of all debts provided for in the plan or disallowed under section 502, if the debtor has received a discharge—
(1) in a case filed under chapter 7, 11, or 12 of this title during the 4-year period preceding the date of the order for relief under this chapter, or
(2) in a case filed under chapter 13 of this title during the 2-year period preceding the date of such order.2
[3]

Relatively unambiguously, new § 1328(f)(1) states mandatorily that the court “shall not” grant a discharge if the debtor received a discharge in a Chapter 7, 11 or 12 case “filed . . . during the 4-year period preceding the date of the order for relief under this chapter.” The counting rule here is clear: the “order for relief under this chapter” would be the date of filing the current Chapter13 petition; the four-year period would run from the date of filing of the prior case in which the debtor received a discharge. In other words, the four-year bar to successive discharges runs from the filing of a prior Chapter 7 (11 or 12) case to the filing of the current Chapter 13 case.

[4]

The new limitation on successive Chapter 13 discharges in § 1328(f)(2) is not unambiguous. The two-year limitation in new § 1328(f)(2) applies if the debtor received a discharge “in a case filed under Chapter 13” during the two-year period “preceding the date of such order.” If “such order” at the end of new § 1328(f)(2) means “the order for relief under this chapter,” then the two-year period would be counted from the filing of the prior Chapter 13 case to the filing of the current Chapter 13 case. If “such order” in § 1328(f)(2) refers to “received a discharge,” then it is arguable that the two-year prohibition on successive Chapter 13 discharges is counted from the entry of discharge in the prior Chapter 13 case to the date of filing of the current Chapter 13 case.

[5]

There may be logical arguments why the second interpretation should prevail, but statutory construction rules support the first. The “case filed under chapter 13 of this title” is the antecedent closest to the phrase “during the 2-year period preceding the date of such order.” If the drafters intended to measure from a discharge during the two-year period, the two phrases would have been reversed and the sentence would read, “In a case filed under chapter 13 of this title, if the debtor has received a discharge during the 2-year period preceding . . . .” The only “order” mentioned by name in the new section is the “order for relief under this chapter” at the end of § 1328(f)(1). The use of “such order” at the end of new § 1328(f)(2) most logically recalls the order for relief under this chapter at the end of the preceding sentence. The order of phrases and sentences in new § 1328(f)(2) favors the construction that the two-year period between Chapter 13 discharges is measured from the filing of the prior Chapter 13 case to the filing of the current Chapter 13 case.

[6]

The objection to this construction reasons from the fact that Chapter 13 cases typically last three years or more from filing to discharge. If the two-year period in § 1328(f)(2) is counted from the filing of a prior Chapter 13 case in which a discharge is subsequently entered, there would be no temporal bar to a subsequent Chapter 13 discharge if two years or more pass between the filing and discharge in the prior Chapter 13 case.

[7]

The House Report explains new § 1328(f) as follows:

[Section 312 of BAPCPA] amends § 1328 to prohibit the issuance of a discharge in a subsequent chapter 13 case if the debtor received a discharge in a prior chapter 7, 11, or 12 case within four years preceding the filing of the subsequent chapter 13 case. In addition, it prohibits the issuance of a discharge in a subsequent chapter 13 case if the debtor received a discharge in a chapter 13 case filed during the two- year period preceding the date of the filing of the subsequent chapter 13 case.3
[8]

It can be anticipated that creditors (trustees?) will argue for a rule that counts from discharge in the prior case to filing of the current case. Under this construction, the word “filed” in the introductory phrase in both § 1328(f)(1) and (f)(2) refers to the chapter of the prior case rather than the timing of the prior case. Both the four-year and the two-year limitations would then be counted from discharge in the prior case without regard to when the prior case was filed. This construction raises the question why subparagraphs (1) and (2) were not written in parallel. “Such order” at the end of § 1328(f)(2) would mean the same as “the order for relief under this chapter” at the end of § 1328(f)(1) and both subparagraphs should have been written so that it is the discharge during the two-year or four-year period that is counted backward from the date of the order for relief in the current Chapter 13 case. In other words, the issue is not whether “such order” refers to the “order for relief under this chapter” or to the “discharge”; the question is whether it is discharge during the four-year or two-year period that triggers the time bar or “a case filed” during the four-year or two-year period that triggers the time bar. The language of the House Report favors the interpretation that the timing is measured from when the prior case was filed rather than from when the discharge was entered. But both constructions are plausible.

[9]

However the counting rules in new § 1328(f) are interpreted, counsel should keep in mind that nothing in this new section prevents the filing of a Chapter 13 case at any time after discharge in a prior bankruptcy case if the debtor is not desperate for a discharge. New § 1328(f) is a limitation on the granting of successive discharges, but it does not purport to be a limitation on the eligibility of the debtor in a Chapter 13 case.

[10]

At this writing, there is no bankruptcy rule addressing how the temporal limitations in new § 1328(f) should be raised in a Chapter 13 case. In contrast, Interim Rule 4004 reflects the many new requirements and conditions for discharge imposed by BAPCPA. New § 1328(f) simply states that the court “shall not” grant a discharge if the temporal limitations on discharge are in play. It is not obvious how the court will know or who has responsibility to determine compliance with the new section. There is no analogue in new § 1328(f) to the new certificates required by BAPCPA and by the Interim Rules with respect to several other new conditions for discharge in Chapter 13 cases.4


 

1  See 11 U.S.C. § 727(a)(9).

 

2  11 U.S.C. § 1328(f).

 

3  H.R. Rep. No. 109-31, at 57 (emphasis added).

 

4  See §§ 545.1 [ New Domestic Support Obligation Certification ] § 156.4  Domestic Support Obligation Certification and 546.1 [ Instructional Course Requirement ] § 156.5  Instructional Course Requirement.