In Re Burrell

148 B.R. 820, 5 Bankr. Ct. Rep. 258, 28 Collier Bankr. Cas. 2d 491, 1992 Bankr. LEXIS 2057, 1992 WL 395905
CourtUnited States Bankruptcy Court, E.D. Virginia
DecidedDecember 11, 1992
Docket19-30838
StatusPublished
Cited by16 cases

This text of 148 B.R. 820 (In Re Burrell) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Burrell, 148 B.R. 820, 5 Bankr. Ct. Rep. 258, 28 Collier Bankr. Cas. 2d 491, 1992 Bankr. LEXIS 2057, 1992 WL 395905 (Va. 1992).

Opinion

MEMORANDUM OPINION

DOUGLAS O. TICE, Jr., Bankruptcy Judge.

This converted chapter 7 case comes before the court on this court’s order for the debtor to show cause why he should not be denied a discharge pursuant to 11 U.S.C. § 727(a)(8) because he had previously re- ■ ceived a chapter 7 discharge in a case filed within six years of the present case. The issue was raised by the court, sua sponte. Hearing on the show cause was held on November 18, 1992, and the matter was taken under advisement. For the reasons stated in this opinion the court will deny the debtor a discharge pursuant to 11 U.S.C. § 727(a)(8) and 11 U.S.C. § 105(a).

Facts

Pro se debtor Charles Burrell received a chapter 7 discharge in a case commenced on June 13, 1986. Debtor filed his current bankruptcy case as a chapter 13 on October 21,1991, and moved to convert it to chapter 7 on June 3, 1992. The case was converted to chapter 7 on June 9, 1992.

Debtor’s Position

Apparently debtor wanted to have the present case converted to chapter 7 after *822 June 13, 1992 (the six year anniversary of his last chapter 7 case), believing this would qualify him for another chapter 7 discharge. However, debtor asserts the clerk's office disobeyed his instructions and converted the case too soon. Accordingly, debtor argues he should not be denied a chapter 7 discharge in this bankruptcy case. He has made no substantive argument contesting the rationale of the court’s show cause order.

Discussion and Conclusions of Law

The issue before the court is whether debtor is entitled to a chapter 7 discharge in light of 11 U.S.C. § 727(a)(8) which states in pertinent part:

(a) The court shall grant the debtor a discharge, unless— ... (8) the debtor has been granted a discharge under this section ... in a case commenced within six years before the date of the filing of the petition;

11 U.S.C. § 727(a)(8) (emphasis added).

[1] The purpose of this section is to prevent overly frequent use of liquidation as a means of avoiding debt. Madison Lumber & Block Company v. Rand D. Marshall (In re Marshall), 74 B.R. 185, 186 (Bankr.N.D.N.Y.1987) (citing 4 Lawrence P. King, Collier on Bankruptcy, ¶ 727.11, ¶ 727-83, 84 (15th ed. 1986)).

The statute is clear that the date on which the six year period begins to run is the commencement date of the previous chapter 7 case. See Michael Antonio Canganelli v. Lake County Indiana Department of Public Welfare (In re Canganelli), 132 B.R. 369, 378 (Bankr.N.D.Ind.1991). In this case the beginning date is June 13, 1986, and debtor has not argued otherwise.

The second part of the issue is whether the date which concludes the six year period is the initial filing date of debt- or’s present case or the date the case was converted to chapter 7. Although both

dates are within the six year period barring a subsequent chapter 7 discharge (October 21, 1991 and June 9, 1992), debtor asserts that if the appropriate date is the date of conversion he should be entitled to a discharge nonetheless because the clerk’s office erred in converting his case too soon and contrary to an instruction contained in his motion to convert.

The bankruptcy code and applicable case law is quite clear that the date of the original filing and not the date of conversion is the date which concludes the six year period barring a subsequent chapter 7 discharge. 11 U.S.C. § 348(a) 1 ] see e.g., Michael Antonio Canganelli v. Lake County Indiana Department of Public Welfare (In re Canganelli), 132 B.R. 369, 380 (Bankr.N.D.Ind.1991); In re Marshall, 74 B.R. at 186. Application of § 348(a) mandates that the “date of filing” the original chapter 13 petition controls. Therefore, since debtor filed his chapter 13 petition on October 21, 1991, this court holds that debtor is not entitled to a another chapter 7 discharge in this case. Debtor’s current bankruptcy petition was filed within six years from the commencement of debtor’s previous chapter 7 case (June 13, 1986) in which he received a discharge. As such, 11 U.S.C. § 727(a)(8) prevents the debtor from receiving a discharge.

Finally, I believe my decision to act, sua sponte, in this matter is warranted under 11 U.S.C. § 105(a) which states in pertinent part:

The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action necessary or appropriate to ... prevent an abuse of process.

11 U.S.C. § 105(a) (emphasis added).

In this regard I respectfully disagree with Chief Judge Kent Lindquist’s opinion *823 in In re Canganelli, 132 B.R. at 383-85. Chief Judge • Lindquist interpreted Bankruptcy Rule 4004 and 11 U.S.C. § 727(c)(1) as precluding the bankruptcy court from sua sponte denying a debtor a discharge under 727(a)(8) irrespective of the court’s equitable powers under § 105.

Bankruptcy Rule 4004 places a strict 60 time limit upon the filing of a complaint objecting to a general discharge under § 727(a). Section 727(c)(1) states that “the trustee, a creditor, or the United States trustee may object to the granting of a discharge under subsection (a) of this section.” 11 U.S.C. § 727(c)(1). Chief Judge Lindquist concluded that the bankruptcy court is bound by these provisions and is thereby precluded from acting sua sponte to deny a debtor a discharge under § 727(a)(8). Id. at 383-84. When referring to the court’s equitable powers under § 105, Chief Judge Lindquist stated:

§ 105 speaks in terms of the power of the Court in carrying out or enforcing Court orders or rules or preventing abuse of process, and not to enforcing sua sponte the substantive rights which otherwise belong to the creditors, the trustee or the United States.

In re Canganelli, 132 B.R. at 384.

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Bluebook (online)
148 B.R. 820, 5 Bankr. Ct. Rep. 258, 28 Collier Bankr. Cas. 2d 491, 1992 Bankr. LEXIS 2057, 1992 WL 395905, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-burrell-vaeb-1992.