Chapter 13 Can Prevent Foreclosure Absent A Discharge.

Chapter 13 Can Prevent Foreclosure Absent A Discharge. "In today's poor economy, where home foreclosures appear to be common and where debtors have few options to halt a foreclosure, a chapter 13 filing may be the only option if the bank refuses to negotiate with the debtor. If a debtor has filed a previous chapter, the bankruptcy code imposes a time limit within which he or she cannot register a chapter 13 case and obtain a discharge. When a debtor is compelled to file a chapter 13 in order to protect their home, many trustees will file a motion to dismiss the case without considering the code's precise language. In reality, the code does not prohibit a debtor from registering for chapter 13 bankruptcy, even if they are still in another chapter 13 or 7, but rather prohibits a discharge. As a result, many trustees do not consider the possibility that a debtor is pursuing the protection of chapter 13 benefits outside of a discharge.There is some, albeit limited case law on point, that would defend a homeowner attempting to save their home by utilizing the automatic stay for at least five years. In a case from 2008, the trustee argued that debtors who were ineligible for discharges under 11 U.S.C.S. 1328(f) should not be permitted to file a Chapter 13 petition. The court held that a debtor was not precluded from pursuing a new Chapter 13 bankruptcy case in good faith despite being ineligible for a discharge under Section 1328(f). ... 11 U.S.C.S. 109(e) determines whether an individual is eligible to file for Chapter 13 bankruptcy. 11 U.S.C.S. 1328(f) never uses the word ""filing,"" only refers to ""discharge,"" and does not limit the eligibility provisions of 11 U.S.C.S. 109(e). Consequently, the clear language of 11 U.S.C.S. 1328(f) does not prohibit an ineligible debtor from filing a Chapter 13 petition. Branigan v. Bateman (In re Bateman), 515 F.3d 272 (2008). The Bateman decision further held that 11 U.S.C.S. 1328(f) does not prohibit a debtor from registering for Chapter 13 bankruptcy despite his ineligibility for a discharge. In Branigan v. Khan (In re Khan), Bankr. Although the availability of a discharge is unquestionably the primary reason Chapter 7 cases are filed and Chapter 7 debtors view the bankruptcy discharge as ""the holy grail,"" a Chapter 13 debtor who is ineligible for a discharge may file a Chapter 13 case and use Chapter 13's tools to cure a mortgage, deal with other secured debts, or simply pay debts under a plan with the protection of the automatic stay. In many Chapter 13 cases, the debtor's ""holy grail"" is the ability to reorganize their finances and repay their debts, not the ability to receive a discharge. Congress has expressly prohibited various forms of serial filings in 11 U.S.C.S. 109(g) (no filings within 180 days of dismissal), 11 U.S.C.S. 727(a)(8) (no Chapter 7 filing within six years of a Chapter 7 or Chapter 11 filing), and 11 U.S.C.S. 727(a)(9) (limitation on Chapter 7 filing within six years of Chapter 12 or Chapter 13 filing). The absence of a similar prohibition on serial filings of Chapter 7 and Chapter 13 petitions, combined with the evident care with which Congress crafted these express prohibitions, convinces the Supreme Court of the United States that Congress did not intend to categorically deny a debtor who has previously filed for Chapter 7 relief the benefit of Chapter 13 reorganization. ... 11 U.S.C.S. 1328(f) contains plain and unambiguous language. It prohibits only the granting of a Chapter 13 discharge and does not address the 11 U.S.C.S. 109 conditions under which a Chapter 13 bankruptcy petition may be filed.
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