Cite as: Keith M. Lundin, Lundin On Chapter 13, § 161.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
Section 1328(a) states that the court can approve “a written waiver of discharge executed by the debtor after the order for relief.” The language is clear that prebankruptcy waivers—in a loan document, for example—are not effective. The language is not clear whether a Chapter 13 debtor can waive the discharge with respect to individual debts or only as to all debts.
Waiver of discharge is rarely seen in Chapter 13 cases. If interpreted to permit a debt-by-debt waiver, § 1328(a) could be useful to Chapter 13 debtors, especially in jurisdictions where the courts are reluctant to confirm plans that compromise claims that would be nondischargeable in a Chapter 7 case.1
For example, when the debtor has a large claim that would be nondischargeable in a Chapter 7 case, on good-faith2 or unfair- discrimination3 grounds, some courts deny confirmation of plans that propose to compromise the claim or that propose to pay the claim in full at the expense of other unsecured claims. If the debtor can waive discharge of a specific debt under § 1328(a), the debtor might separately classify the nondischargeable claim for pro rata payment through the plan and the balance to survive discharge. Waiver of discharge might be seen as evidence of good faith when the plan is otherwise the debtor’s best effort to manage the effects of prepetition misconduct. In one reported decision, a Chapter 13 debtor’s offer of personal liability for a claim that was discharged in a prior Chapter 7 case was cited by the court as evidence of good faith at confirmation.4
1 See § 88.1 In General, § 88.2 Nondischargeable Claims after BAPCPA, § 88.10 Claims That Are or Might Be Nondischargeable Only in a Chapter 7 (Chapter 12, or Individual Chapter 11) Case, § 106.1 In General and § 106.5 Separate Classification of Nondischargeable Claims and Good Faith.
3 See § 87.1 Power to Classify Unsecured Claims: Tests for Unfair Discrimination, § 87.2 Classification after BAPCPA, § 88.1 In General, § 88.2 Nondischargeable Claims after BAPCPA and § 88.10 Claims That Are or Might Be Nondischargeable Only in a Chapter 7 (Chapter 12, or Individual Chapter 11) Case.
4 See Society Nat’l Bank v. Barrett (In re Barrett), 964 F.2d 588 (6th Cir. 1992) (Court confirms debtor’s third Chapter 13 case over good-faith objection notwithstanding evidence of substantial misconduct by the debtor during prior bankruptcy cases when, among other things, debtor’s plan proposed to make the debtor personally obligated again with respect to a mortgage discharged in a prior bankruptcy case.).