Archive for the ‘Denial of Discharge’ Category

My Chapter 7 Has Been Denied, Now What?

I recently had a client come to me who had his previous Chapter 7 denied under 727(a)(3), 727(a)(5) and 727(a)(6)(c). Evidently a creditor had started to request documents and since he was unemployed at the time, he could not afford the additional fees required to defend this separate adversary action. So the creditor ended up filing a complaint to deny discharge and the Client had to defend it pro se. Needless to say, he eventually lost at the hearing and his Chapter 7 bankruptcy was denied.

You Cannot File A Subsequent Chapter 7 to Discharge Previously Denied Debts

11 USC 523(a)(10) lays out all of the debts that cannot be discharged in a subsequent Chapter 7 case.

The statute states:

(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt…

(10) that was or could have been listed or scheduled by the debtor in a prior case concerning the debtor under this title or under the Bankruptcy Act in which the debtor waived discharge, or was denied a discharge under section 727(a)(2), (3), (4), (5), (6), or (7) of this title, or under section 14c(1), (2), (3), (4), (6), or (7) of such Act;

So essentially any debt that “was or could have been listed or scheduled” in the previous case in which the bankruptcy was denied under 727 is automatically non-dischargeable under any subsequent Chapter 7 case. And there is no expiration on this, these debts cannot be discharge in any Chapter 7 case, ever.

There is Hope, the Chapter 13 Super Discharge

You may think you will never be able to get on your feet again, that you will die paying off these debts, but there is hope.

11 USC 1328 states:

(a) Subject to subsection (d), as soon as practicable after completion by the debtor of all payments under the plan, and in the case of a debtor who is required by a judicial or administrative order, or by statute, to pay a domestic support obligation, after such debtor certifies that all amounts payable under such order or such statute that are due on or before the date of the certification (including amounts due before the petition was filed, but only to the extent provided for by the plan) have been paid, unless the court approves a written waiver of discharge executed by the debtor after the order for relief under this chapter, the court shall grant the debtor a discharge of all debts provided for by the plan or disallowed under section 502 of this title, except any debt-

(1) provided for under section 1322(b)(5);
(2) of the kind specified in section 507(a)(8)(C) or in paragraph (1)(B), (1)(C), (2), (3), (4), (5), (8), or (9) of section 523(a);
(3) for restitution, or a criminal fine, included in a sentence on the debtor’s conviction of a crime; or
(4) 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.

As you can see, 11 USC 523(a)(10) is not listed above. Most courts have read this to mean that debts that were denied discharge under 727 in previous Chapter 7 cases can be discharged under Chapter 13, as long as all of the requirements are met under 1328. This means you pay as much as you can afford to pay under a Chapter 13 plan for a period between 3 and 5 years depending on you income and you can be debt free, even if you have received a denial of discharge.

If you are in the Chicago area and would like to speak further about your options in regards to Bankruptcy, both Chapter 7 and 13 please call Steven J. Grace at 312-493-6912 for a free phone consultation.

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At The Law Offices of Steven J. Grace, based in Chicago, Illinois, we represent clients throughout Chicagoland, including the cities of Deerfield, Jefferson Park, Lisle, Northbrook, Oak Brook, Park Ridge, Schaumburg, St. Charles and Warrenville; and other communities in Cook County, Dupage County, Will County, Grundy County, Kendall County, Kane County, LaSalle County and Lake County.