Case No. 98-15378-RGM (Chapter 7).United States Bankruptcy Court, E.D. Virginia, Alexandria Division
April 13, 2000.
MEMORANDUM OPINION
Robert G. Mayer, United States Bankruptcy Judge.
THIS CASE came on this day on the motion of the United States Trustee to reopen the case for the purpose of filing an objection to the discharge of the debtors. The United States Trustee points out that this case was originally filed as a chapter 13 proceeding within six years after the debtor filed a chapter 7 proceeding in which he was granted a discharge. This case was subsequently converted to a proceeding under chapter 7 and a discharge was granted to the debtors and the case closed. Section 727(a)(8) of the United States Bankruptcy Code would ordinarily prevent the debtors from obtaining a second chapter 7 discharge within six years of the filing of a prior case in which a discharge was granted. Section 727(e), however, places certain restrictions on the revocation of a discharge granted in a chapter 7 proceeding.
In this case, there is no question that the debtors acted innocently and did not obtain their discharges fraudulently. They fully disclosed the husband’s prior chapter 7 proceeding on the initial petition in bankruptcy. It is possible that in converting from a proceeding under chapter 13 to a chapter 7 that the entire file was not transferred to the chapter 7 trustee and that he was not personally aware of the prior petition. In any event, it was fully disclosed. All creditors had an opportunity to review the court file as did the trustee. The debtors appeared at a first meeting of creditors where this matter could have been examined at length. There is no evidence that the debtor concealed the prior discharge. There is also no question that the co-debtor has not previously filed a petition in bankruptcy and is entitled to a discharge in this case. The court cannot consistent with § 727(e) reopen this case for the purpose of revoking the debtors’ discharges in this case.
The court further notes that given the apparent innocence involved that the appropriate remedy if this case were to be reopened would be to revoke without prejudice the discharge granted in this case and to dismiss the case as to the husband. He could then immediately re-file a new chapter 7 proceeding because the six-year bar would have then expired. Re-opening the case would incur needless expense for the debtors and creditors without any corresponding benefit.
The court notes that it was not improper for the debtors to convert to a proceeding under chapter 7. Chapter 7 is available even if one has obtained a discharge in a prior chapter 7 within six years. The only restriction is that the second chapter 7 case cannot result in a discharge. While such sequential chapter 7 cases would be extremely unusual, it is not prohibited and may, in some circumstances, benefit both debtors and creditors.