Effect of Previous Bankruptcy Cases
Previous bankruptcy cases give rise to the following issues:
- A person is not eligible to be a debtor in a case under any bankruptcy chapter if within the past 180 days a previous bankruptcy case filed by him was dismissed, either voluntarily after a stay motion was filed, or for willful failure to abide by court orders or to appear before court. 11 U.S.C. Section 109(g).
- The automatic stay is lifted as to property of the estate 30 days after a chapter 13 case is filed if a prior chapter Bankruptcy 13 case was pending (not just filed) within one year before the current case was filed and the previous case was dismissed, unless the debtor files and prevails on a motion to extend the stay by overcoming a presumption of bad faith. Bad faith is presumed if in the previous case the debtor failed to file documents, to make plan payments, or to pay adequate protection, or if there has been no change in circumstances; in other words, bad faith is usually presumed. In re Havner, 336 B.R. 98 (Bankr. M.D.N.C. 2006) and In re Galanis, 334 B.R. 685 (Bankr. D. Utah 2005) list criteria regarding whether the bad-faith presumption is overcome. There is no automatic stay at all if two prior cases were pending in the past year, but the debtor can file a motion to impose the automatic stay. 11 U.S.C. Section Tax 362(c)(3). These motions should specifically address every Havner/Galanis criteria. The motions can be filed on notice and opportunity for hearing, so that no hearing is necessary if no objections are filed; however, the court itself would probably set a hearing if the Tax bad faith did not appear to be rebutted by the facts alleged in the motion. These motions should be filed with the bankruptcy petition, because the deadlines for the court to enter an order are short; in the Northern District of Oklahoma, a local rule sets a deadline for filing such motions.
- The debtor is not entitled to a discharge in a chapter 7 case if he received a discharge in a chapter 7 or 11 case filed within 8 years before filing the current case. The previous case’s filing date is the date that counts, not the discharge or closing date. 11 U.S.C. Section 727(a)(8).
- The debtor is not entitled to a chapter 7 discharge if he received a discharge in a chapter 12 or 13 case filed within six years before filing the current case. However, there is no discharge bar if (a) the plan in the previous case paid 100% of the general unsecured claims or (b) the plan in the previous case paid at least 70% of the general unsecured claims and was in good faith and debtor’s best effort. 11 U.S.C. Section 727(a)(9).
- The debtor is not entitled to a chapter 13 discharge if he received a discharge in a chapter 7, 11, or 12 case filed within four years before filing the current case. 11 U.S.C. Section 1328(f)(1).
- The debtor is not entitled to a chapter 13 discharge if he received a discharge in a chapter 13 case filed within two years before filing the current case. 11 U.S.C. Section 1328(f)(2).
Sometimes it is beneficial to file a chapter 13 case even when the debtor is not entitled to a discharge, e.g., to stop a foreclosure or the collection of a student loan or to force a payment schedule on a tax debt or child support arrearage.