A debtor whose discharged is denied or revoked in a Chapter 7 case cannot
discharge in a later
Chapter 7 case claims incurred before the prior case. 11 U.S.C. §523(a)(10). However,
for individuals who qualify for Chapter 13, the denial or revocation of
discharge in an earlier Chapter 7 case might not preclude the granting
of a so-called “super-discharge” in a later-filed
Chapter 13 case.
The Bankruptcy Code describes certain types of claims that are not discharged
in Chapter 13 cases. For example, certain taxes, alimony and child support,
and debts found by the bankruptcy court to have been incurred through
not dischargeable in Chapter 13.
See 11 U.S.C. 1328 (incorporating 11 U.S.C. §523(a) (1)(B & C), (2),
(3), (4), (5), (8), and (9), but
not sub-sections (6), (7), and (10)).
But what about debts scheduled in a prior Chapter 7 case in which the discharge
was revoked or denied? Can those be discharged in a Chapter 13 case? The
answer depends on whether or not the debtor completes her plan payments.
If the debtor receives a so-called “hardship” discharge under
prior to completing her plan payments, then the earlier Chapter 7 claims are
will not be discharged. 11 U.S.C. §523(a)(10). However, if the debtor
completes her plan payments, then otherwise dischargeable claims (an even
non-dischargeable claims) from the prior Chapter 7 case can be discharged by much more encompassing
“super-discharge” available in the later-filed Chapter 13
case. 11 U.S.C. §1328(a).
At least one appellate court’s agrees with our reasoning and has
held that a “prior declaration of non-dischargeability does not
per se . . . prevent discharge of the debt” in a subsequent Chapter 13 case.
In re Chaffin, 816 F.2d 1070, 1071 (5th Cir. 1987). In
Chaffin, the Fifth Circuit Court of Appeals reversed two lower courts and allowed
a debtor to discharge in his Chapter 13 case a debt that could not be
discharged in his earlier Chapter 7 case. Rejecting a creditor’s
bad faith argument, the Fifth Circuit Panel wrote:
“The debt from which Chaffin now seeks discharge is not of the kind
stated to be non-dischargeable by § 1328. Congress could have easily
added more exceptions to the list in § 1328(a) had it so intended.”
Thus, although a bankruptcy court may revoke or deny a discharge in a Chapter
7 case, unless the debt is not explicitly excepted from discharge in Chapter
13, it can be discharged upon consummation of a Chapter 13 plan in a later-filed
Chapter 13 case.
© Alan W. Forsley, Esq. 2015