§ 159.7     Willful or Malicious Injury: § 1328(a)(4)
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 159.7, at ¶ ____, LundinOnChapter13.com (last visited __________).

There is a new exception to discharge at the completion of payments in a Chapter 13 case in § 1328(a)(4) that is roughly modeled on the exception to discharge in § 523(a)(6)—but there are important differences. New § 1328(a)(4) excepts from discharge at the completion of payments in a Chapter 13 case any debt: “for restitution, or damages, awarded in a civil action against the debtor as a result of willful or malicious injury by the debtor that caused personal injury to an individual or the death of an individual.”1


In contrast, the familiar exception to discharge in § 523(a)(6) renders nondischargeable any debt “for willful and malicious injury by the debtor to another entity or to the property of another entity.”2


The § 1328(a)(4) version of this exception to discharge substitutes “or” for “and” to form the phrase “willful or malicious injury” in place of “willful and malicious injury” in § 523(a)(6). This is no small change. The exception to discharge at the completion of payments in a Chapter 13 case is significantly broader with respect to personal injury claims than the analogue at discharge in Chapter 7 cases. The substantial body of case law—including two Supreme Court decisions3—that interprets the phrase “willful and malicious” in § 523(a)(6) is of questionable authority when the disjunctive “or” is at issue and § 1328(a)(4) is in play.


Section 1328(a)(4) is limited to personal injury or death and does not reach willful or malicious injury to property. This is a significant restriction of the Chapter 13 form of this exception to discharge.


New § 1328(a)(4) is worded in the past tense: only restitution or damages “awarded” in a civil action against the debtor are potentially nondischargeable at the completion of payments in a Chapter 13 case. A prepetition award of restitution or damages for willful or malicious injury is prerequisite to a finding of nondischargeability under new § 1328(a)(4).


New § 1328(a)(4) is thus significantly different from § 523(a)(6) and should not be confused with § 523(a)(6) for other purposes in the Bankruptcy Code or Rules. For example, § 523(a)(6) is one of the so-called “fraud” exceptions to discharge that receives special treatment under § 523(c). Section 1328(a)(4) is not referenced in § 523(c). A determination of dischargeability under § 1328(a)(4) is not limited as provided in § 523(c).


The strict time restrictions on the filing of a complaint to determine dischargeability under § 523(a)(6) do not apply to § 1328(a)(4). Bankruptcy Rule 4007(c) requires a complaint to determine the dischargeability of debt under § 523(a)(6) to be filed no later than 60 days after the first date set for the meeting of creditors in a Chapter 13 case—except when the debtor moves for a hardship discharge before the completion of payments under § 1328(b).4 There is no Bankruptcy Rule that sets a deadline for the determination of dischargeability under new § 1328(a)(4).


Procedure under § 1328(a)(4) is somewhat uncertain. Presumably, the debtor or the claim holder would file a complaint to determine dischargeability consistent with Bankruptcy Rule 7001(6). In the absence of statute or rule to the contrary, such a complaint could be filed before or after the debtor completes payments under the plan and becomes eligible for discharge under § 1328(a). There is no jurisdictional barrier to a determination of dischargeability under § 1328(a)(4) by a state court before or after the completion of payments under a Chapter 13 plan. Stay relief would be a good idea before filing such a complaint anywhere except in the bankruptcy court before discharge in the Chapter 13 case.


The omission of injuries to property in new § 1328(a)(4) means that Chapter 13 cases will not see the common conversion cases that often arise in Chapter 7 practice under § 523(a)(6) when the debtor has disposed of collateral in violation of a security agreement. But the conjunctive “willful or malicious” form of this new exception to discharge in Chapter 13 cases will invite a broader range of litigation than is seen under § 523(a)(6) because “willful” injury is relatively easier to prove than willful and malicious injury.


New § 1328(a)(4) could inspire bankruptcy courts to grant relief from the stay when a civil action is pending against the debtor in which willful or malicious personal injury is alleged. The victim’s argument for stay relief would be that the civil action must be completed to determine whether restitution or damages will be “awarded” for purposes of § 1328(a)(4). If restitution or damages have not been “awarded” at the petition, the Chapter 13 debtor has a compelling argument that the debt is simply contingent and/or unliquidated—allowable in the Chapter 13 case but not nondischargeable under new § 1328(a)(4). By analogy, § 101(14A) speaks of a domestic support obligation that is “established or subject to establishment.”5 The less expansive use of the word “awarded” in § 1328(a)(4) should confine this exception to discharge to restitution or damages that already happened at the Chapter 13 petition.


Notice also that the formulation in § 1328(a)(4) requires willful or malicious injury “that caused personal injury.” This, too, is different from the simpler statement “willful and malicious injury . . . to another” in § 523(a)(6). An injury that causes personal injury seems one step removed from an injury to another, but the intended difference is obscure.


1  11 U.S.C. § 1328(a)(4) (emphasis added).


2  11 U.S.C. § 523(a)(6) (emphasis added).


3  See Kawaauhau v. Geiger, 523 U.S. 57, 118 S. Ct. 974, 140 L. Ed. 2d 90 (1998); Tinker v. Colwell, 193 U.S. 473, 24 S. Ct. 505, 48 L. Ed. 754 (1904).


4  See 11 U.S.C. § 1328(b) and Interim Bankr. R. 4007(d), discussed in § 558.1 [ New and Changed Exceptions to Hardship Discharge ] § 160.7  Exceptions to Hardship Discharge Added or Changed by BAPCPA.


5  11 U.S.C. § 101(14A)(C), discussed in §§ 440.1 [ New and Changed Priority Claims ] § 73.3  Priority Claims Added or Changed by BAPCPA and 519.1 [ Domestic Support Obligations ] § 136.21  Domestic Support Obligations after BAPCPA.